Should I repay this debt early?

bigpat

Some months ago, in order to help out a close friend, I borrowed £4,000 on an MBNA credit card, interest free for 26 months. My credit history is such that I could get this deal, whereas she couldn't have got it herself.

Her circumstances have now improved I'm glad to say, and she has repaid me all of that money a lot earlier than expected. I still have 21 months interest free though.

I can continue paying off the minimum each month and then clear it in Nov 2020, but in the meantime I plan to remortgage my home in order to raise funds for building works.

Should I pay off the MBNA card to "clear the decks" before applying for that mortgage? That would leave me with just one "normal" credit card, that I use and pay off each month.

Are there pros and cons, or does it make no difference?

[Deleted User]

You could do.

As the balance is on a promo it will be marked as such in your files though

planteria

nice of you to do bigpat, and it's great to read that your friend paid you back promptly. i have had experience of trying to help someone in a similar way, but it went incredibly badly as they later claimed that they didn't owe me the money.

so do you mean Gary that as it would be marked as a promo it would be seen favourably by a mortgage lender, ie 'this person is handling their finances wisely, we will not see it as a negative'?

Alexd52

bigpat wrote: »

Some months ago, in order to help out a close friend, I borrowed £4,000 on an MBNA credit card, interest free for 26 months. My credit history is such that I could get this deal, whereas she couldn't have got it herself.

Her circumstances have now improved I'm glad to say, and she has repaid me all of that money a lot earlier than expected. I still have 21 months interest free though.

I can continue paying off the minimum each month and then clear it in Nov 2020, but in the meantime I plan to remortgage my home in order to raise funds for building works.

Should I pay off the MBNA card to "clear the decks" before applying for that mortgage? That would leave me with just one "normal" credit card, that I use and pay off each month.

Are there pros and cons, or does it make no difference?

Probably make little difference.

You could carry on paying the minimum and put the rest into an interest gaining account and make a little money, remembering to clear the card just before the 0% period runs out.

Verityspinelli

bigpat wrote: »

Some months ago, in order to help out a close friend, I borrowed £4,000 on an MBNA credit card, interest free for 26 months. My credit history is such that I could get this deal, whereas she couldn't have got it herself.

Her circumstances have now improved I'm glad to say, and she has repaid me all of that money a lot earlier than expected. I still have 21 months interest free though.

I can continue paying off the minimum each month and then clear it in Nov 2020, but in the meantime I plan to remortgage my home in order to raise funds for building works.

Should I pay off the MBNA card to "clear the decks" before applying for that mortgage? That would leave me with just one "normal" credit card, that I use and pay off each month.

Are there pros and cons, or does it make no difference?

I’d just pay the money back. You took the money out for your friend (you didn’t need it) so pay it back then you don’t have to worry about it. Doesn’t matter what savings account you put it into the interest rates aren’t that great. You obviously are credit worthy if you need the money in the future either get a credit card for yourself with 0% spending or save up for it.
You’re going to have to keep digging in to the savings to make the minimum payment anyway (which of course banks don’t like to see, even if it is 0% remember other lenders like mortgages won’t know its 0% they’ll just see minimum payments) or you can pay the minimum amount out of your own pocket which means you could actually save up yourself.

Verityspinelli

Talking about your remortgaging to be fair a lot of people will tell you the more credit cards you’ve got the better or the more you use them and pay them off you will look good to other lenders. I got my mortgage with one credit card on my credit report with a £1000 limit on it. And no it wasn’t back when we made houses with mud and sticks.

[Deleted User]

I'd pay it off if only to avoid the temptation to spend it

System

Verityspinelli wrote: »

Talking about your remortgaging to be fair a lot of people will tell you the more credit cards you’ve got the better or the more you use them and pay them off you will look good to other lenders. I got my mortgage with one credit card on my credit report with a £1000 limit on it. And no it wasn’t back when we made houses with mud and sticks.

Credit cards help you get credit cards.
Paying off your mortgage helps you get mortgages.