Impact of credit history on re mortgage application

Catherine_Fred

Hello, I am about to request a remortgage on our home as we are getting an extension. I have had a look at my credit history through the credit club on this site and it says we are using too much of the credit available to us, eg we have a couple of credit cards that are nearly up to their limit. I didn’t want this to affect our mortgage application. My question is, from a mortgage acceptance point of view, if we consolidated our credit card debts into a loan and paid that off monthly, would that be preferable to motagage lenders to having maxed out credit cards? I know each mortgage lender is different in terms of their preferences. We could pay off a bit of credit card but want to apply for the remortgage fairly soon. Thank you.

Nebulous2

You really haven't given people enough to work on. What are your salaries? Credit card debt? How much do you want to borrow?

Mortgage lenders will be more worried about affordability than being maxed out. £2k of debt against £40k income might be fine, where £20k wouldn't be, regardless of percentages used.

Thrugelmir

Much depends on the fine detail of your own application. Maxed to the limit needs to be in context. As lenders can identify trends from datasets provided by the credit reference agencies. Not just use the total debt owed as part of their affordability criteria.

Catherine_Fred

Okay thank you both. We want to borrow an extra £140k which will be comfortably affordable to us, as we have a combined salary of around 90k. We have only quite recently come into comfortable salaries though so haven’t sorted out some historical debt eg two credit cards with combined debt £6500 plus I have an overdraft of £2400. So I was wondering if it would be better to put that debt into a loan and pay off rather than look like we are up against our limits. Thanks for your help.

butterflybook

The debt to income ratio seems to be fairly low considering your salaries now. I would work on reducing the balances if you can so that they are not at the limit but i do not think it would be any more favourable to consolidate in to a loan from what you have said, unless you are paying astronomical amounts of interest

Thrugelmir

Catherine_Fred wrote: »

We want to borrow an extra £140k which will be comfortably affordable to us,

Additional to an existing mortgage of?

The property will need to have adequate equity to support the total borrowing requirement.