Mortgage and Credit Cards

Bugalugs

We are first time buyers with credit card debts of £7k. A couple of friends want to pay these off for us. We anticipate that we will then be ready to buy in approx ten month’s time. Will this kind deed cause problems when we apply for a mortgage?

Thrugelmir

You've extremely charitable "friends". When you say pay off, presumably you'll still repay your friends back.

Bugalugs

They were just looking for ways to help us. Initially they were going to gift us money towards a deposit, but that appears to make the number of mortgage lenders that we can use rather limited. They have a large property so we’re going to move in to the top floor which will allow us to put away a large amount each month. They said that they would like to pay off the credit card, but I’m worried that this could be a potential problem that the bank may question when we apply for a mortgage in approx ten months.

LRmortgage

Why would the bank question it?
If your friends pay off the cards now and you’re not applying for a mortgage for another 10 months then the lender won’t care.
You’ll be putting the balances on your cards down as zero on your application (as long as you have haven’t built them up again) and that will match what the lender sees on your credit file.
I think you’re over worrying about this, especially as the time in between will be substantial.

Bugalugs

Thanks - I am just a bit of a worrier, and being first time mortgage applicants I wasn’t sure how far back they go/how in depth the process is and if they would ask who paid them off.

Thrugelmir

Mortgage lending is a low margin high volume business. Financial relationships are built on trust. Mainstream mortgage lenders have no inclination to operate at the micro level. Lenders will not go digging back through your past. If however there's the slightest whiff of a discrepancy or suspicion that material facts are being withheld. Then the bond of trust will be broken permanently.