Will shuffling cards help or hinder mortgage application?

okidoodle

I've recently done a bit of shuffling around of credit cards etc in order to get my debt levels down (it's currently about 15k but now going in the right direction). I've paid off/balance transferred and closed a couple of cards and I'm down to two that are both on 0% deals and a card with a £6000 limit that I have clear but still open.
Another job on the list is to remortgage to a fixed rate ASAP as we are on SVR.
My question would be what effect in terms of credit rating/ mortgage acceptability would any of this have? I know credit searches impact your file but if they are accompanied by paid off in full/closed cards and a reducing level of overall debt is that a positive to them?
At the moment I am also looking to overpay as much as possible (I have added an extra £50 per month payment to my loan and I'm making one off payments where I can. Do they look at those payments as the "spare" money they should be (as they are well over the required payments), or do they see those as essential outgoings as they are paying off debt? Without my overpayments I would have an extra £200-250 per month.

Does any of this make a difference or is it simply "how much do you earn"?

csgohan4

Any loan/debt will impact on affordability, use the mortgage calculators that are available widely, Halifax, nationwide e.t.c

okidoodle

That wasn't the question I was asking, but thanks.

Lotak

okidoodle wrote: »

I've recently done a bit of shuffling around of credit cards etc in order to get my debt levels down (it's currently about 15k but now going in the right direction). I've paid off/balance transferred and closed a couple of cards and I'm down to two that are both on 0% deals and a card with a £6000 limit that I have clear but still open.
Another job on the list is to remortgage to a fixed rate ASAP as we are on SVR.
My question would be what effect in terms of credit rating/ mortgage acceptability would any of this have? I know credit searches impact your file but if they are accompanied by paid off in full/closed cards and a reducing level of overall debt is that a positive to them?
At the moment I am also looking to overpay as much as possible (I have added an extra £50 per month payment to my loan and I'm making one off payments where I can. Do they look at those payments as the "spare" money they should be (as they are well over the required payments), or do they see those as essential outgoings as they are paying off debt? Without my overpayments I would have an extra £200-250 per month.

Does any of this make a difference or is it simply "how much do you earn"?

In terms of shuffling cards, this will of course impact on your credit file, and it is up to the Lender to decide if they want to lend. They will see that multiple credit card companies have done a search on you and will make a decision on that. If you are able to explain to the broker / mortgage adviser, that may help. The view on credit varies between lenders. Some will say that having cards with low utilisation (i.e. you've got loads of free capacity to borrow) is bad because it means you may borrow that. Some will say that having cards with high utilisation is bad because it means you're too reliant on credit card debt. It all depends on the lender.

With regards to payments, this also varies by lender. Some will base it on actual payments made (i.e. if you overpay by £50 a month, that means your monthly expenses is £50 higher, therefore affordability is lower). Some will base it on a % (usually 3% to 5% of balance), as that tends to represent the minimum allowable. Again, all depends on the lender.

So to put it simply, shifting your debt to a 0% card may work in your favour or not.
Overpaying on your debt may work against you or not.
It all depends on the lender.

kingstreet

If you've lived in your current home for five minutes, had three jobs in twelve months and want 95% with a default from 2015 that's when you fret about available credit.

For most of the market, such micro-management isn't necessary.

I've been doing this over thirty years and I've never once suggested to anyone closing a credit card would help get them an accept instead of a decline.