Likelihood of Mortgage - Help Please

rm23

Hi,

The usual question I'm sure, but I'm looking to see in your opinions the likelihood of being accepted for a mortgage.

We have around 7% of the deposit for a £120,000 house. Going to do the 5% deposit scheme.
I earn £22,600 and my partner earns £23,900.
Affordability calculators all say we would be fine when putting in expenditures etc.
The twist is that I have currently have £2600 on a credit card with a limit of £4200. Never missed a payment or anything similar and my experian credit score is a high 'good'. My partners parents are gifting us the money to pay off the credit card to help us move out sooner, no word on whether they want the money back but im sure at some point when we are comfortable we will do whether they want it or not.
If my credit card balance is zero when we apply for the decision in principle first as well as the actual mortgage application, but they can see it was gifted by somebody else, is that usually an issue?
Thanks

spadoosh

From what youve said, you shouldnt have an issue with or without paying off the credit card.

We earn less than you as a couple and we have access to more borrowing than you require/will have.

As nerve racking as it is for you, your situation is similar to most FTB's. Youre easy money for them, banks like easy money.

They might ask questions about it being gifted, if its not gifted just say youre paying it back over 3/5 years (if agreeable with parents) and theyll probably think its still affordable for you.

ACG

If you clear the credit card today and apply for a DIP tomorrow you would still need to declare the credit card but just tick to say it will be cleared. The reason for that is it can take up to a month to update on the credit reports. So if you do not declare it, it will look like you are giving incorrect information.

Having a balance is not a problem, it may not even affect how much you can lend.

rm23

Ahh okay. I did notice that it asks what you expect the balance to be when the mortgage is likely to go through, to which i will put zero. Shall i make a note somewhere then also that it currently has a balance that will not be there to save any differing information.

Lotak

I wouldn't worry about it.

You are only borrowing 2.4x your combined income, which is much much lower than the maximum 4.5 that most lenders allow. I really wouldn't worry about it.

Good luck!

If you want more detail ...

I'd tell the lender that the balance is / will be cleared with a gift from your parents.
If they are asking for it to be repaid as the person above said, say they've given you 5 years to repay it. That's an additional £43 / month.

However, it's not really the balance that they care about (unless you are close to the credit limit, which you aren't), rather it's the amount you repay per month. If you can pass their affordability checks with the amount you repay / month, then you won't have a problem getting a mortgage.