Clear credit Card debt or get a mortgage

WaverT

Hi everyone,

I am looking for some advice on what to do with some cash i have. Basically I have £15k of credit card debt and have £15k cash in the bank. I am currently renting and desperate to buy a house. Will i be able to get a mortgage using cash in the bank even with the credit card debt or should i be concentrating on paying off the debt then saving for a deposit?

Some details to help: The credit card debt is interest free for 2 years and i'm paying it off at £500 a month. My salary is around £60K. I'd be looking at a buying a house in the £150K region.

foxy-stoat

Buy a house - keep paying your debt down.

Sad_Dad

15k on credit cards will reduce how much you can borrow but you should still be able to get the full 150k with a 60k salary.

Put your figures into this calculator

https://online.ybs.co.uk/public/mortgages/quick_enquiry.do

If I was in your shoes, I would use the 15k in savings for the deposit and associated costs of buying a house (stamp duty, legal fees, etc).

With your monthly salary, will you be able pay your mortgage, all your household bills, cost of living and at least the minimum monthly payment on your credit card and at the same time transfer around £500 each month into regular savings accounts or current accounts paying 5% (this will then be used in 2 years time to pay the remaining balance on your credit card).

WaverT

Thanks for the advice. It will be a joint mortgage with my wife who so combined salary will actually be close to £85K.

One other question. Some of the credit card debt was accrued gambling (silly, i know) but this going back a few years and the balance has been transferred to a new credit card since. I have no gambling transactions on any accounts in over a year. How far do lenders probe where credit card debt has come from?

lspell1

Simple answer is they wont look into it, especially if its that far back...

muhandis

They don't, nothing to worry about as long as there aren't any bookmaker transactions shown on your recent bank statements.

WaverT wrote: »

How far do lenders probe where credit card debt has come from?

wantonnoodle

Both lenders we've had (we're in the process of remortgaging for the first time) have only gone back 3 months with regard to payslips and statements.