Advice - Paying off credit card and saving for a deposit?

IntotheAbyss

Hi,
Hope this is the right place to post my query.

As per the title, I need some advice.

My partner and I are saving to buy our own house. We both have Help to Buy ISAs and plan to save for the next 18 months or so. Rough guess, we said February 2021 to aim for.

My issue: I currently owe £1800 on an MBNA credit card. 0% until June 2021 so at least I'm not paying interest. This is my only debt.

I am currently saving £200 for the ISA every month (the maximum) and paying off the card £50 per month. By the time February 2021 comes around, I will have paid off £900.

I was then planning to look at a balance transfer – I have two other credit cards (nothing owing on those) giving me a total credit limit of £10,700 so my credit utilisation is low. I usually get offers on both cards each month for balance transfer. Was thinking of using this nearer the time the MBNA 0% ends – I assume this would count as an application for credit, even though I already have the cards? I know not to apply for credit in the months prior to applying for a mortgage, so would like to clarify if I should wait to BT after we’ve completed on a house?

If it is best to wait, will mortgage lenders look at that £900 balance as something bad? I can’t really afford to pay much extra as I would like to save as much towards a deposit as possible.

I have another savings account that is used as and when I need it and then topped up £100 each month. E.g. it’s used for car insurance, Christmas, etc. After Christmas, I will see if I can spare some money from these savings and use that to pay towards the card.

Any extra I do have at the end of each month would also go towards paying off the card but will having a balance on a card hinder a mortgage application?

Apologies for the long post. Thanks

[Deleted User]

IntotheAbyss wrote: »

I usually get offers on both cards each month for balance transfer. Was thinking of using this nearer the time the MBNA 0% ends – I assume this would count as an application for credit, even though I already have the cards?

No, because you're not applying for credit. It's existing credit.

IntotheAbyss

Deleted_User wrote: »

No, because you're not applying for credit. It's existing credit.

Ok, so it wouldn't come up on a credit search by a mortgage lender or affect a mortgage application in the same way a brand new credit application would?

Assuming in 18 months that I'm still getting BT offers, would this be the right way to go? This would mean that I can keep saving as much as I can for a deposit, without worrying too much about how much I'm paying off on the card.

Thanks for the reply :beer:

gj373

IntotheAbyss wrote: »

Hi,
Hope this is the right place to post my query.

As per the title, I need some advice.

My partner and I are saving to buy our own house. We both have Help to Buy ISAs and plan to save for the next 18 months or so. Rough guess, we said February 2021 to aim for.

My issue: I currently owe £1800 on an MBNA credit card. 0% until June 2021 so at least I'm not paying interest. This is my only debt.

I am currently saving £200 for the ISA every month (the maximum) and paying off the card £50 per month. By the time February 2021 comes around, I will have paid off £900.

I was then planning to look at a balance transfer – I have two other credit cards (nothing owing on those) giving me a total credit limit of £10,700 so my credit utilisation is low. I usually get offers on both cards each month for balance transfer. Was thinking of using this nearer the time the MBNA 0% ends – I assume this would count as an application for credit, even though I already have the cards? I know not to apply for credit in the months prior to applying for a mortgage, so would like to clarify if I should wait to BT after we’ve completed on a house?

If it is best to wait, will mortgage lenders look at that £900 balance as something bad? I can’t really afford to pay much extra as I would like to save as much towards a deposit as possible.

I have another savings account that is used as and when I need it and then topped up £100 each month. E.g. it’s used for car insurance, Christmas, etc. After Christmas, I will see if I can spare some money from these savings and use that to pay towards the card.

Any extra I do have at the end of each month would also go towards paying off the card but will having a balance on a card hinder a mortgage application?

Apologies for the long post. Thanks

£900? I really wouldn't worry about it

IntotheAbyss

gj373 wrote: »

£900? I really wouldn't worry about it

Thanks.
I know it's not much, but I've never applied for a mortgage before and I don't want this to be weighing on my mind for the next 18 months.

I feel better now I've asked

grumiofoundation

If you aren’t planning to buy for 18+ months you might want to look at lifetime ISA? (Obviously this would be dependant on the amount in your help to buy isa).

IntotheAbyss

grumiofoundation wrote: »

If you aren’t planning to buy for 18+ months you might want to look at lifetime ISA? (Obviously this would be dependant on the amount in your help to buy isa).

I had been looking at those, but need to do a bit more research. I don't have much in my Help to Buy ISA, only about £500 so far. Would a Lifetime ISA be better for that amount?

EmKnox

I would have imagined it would probably just very slightly effect the amount the bank will be willing to lend to you. When applying for a mortgage they will ask you about any outstanding debts on cards and will ask if you intend to pay it off before completion. Just be honest.


As said before, £900 probably isn't anything to worry about. People get mortgages with much more CC debt than that.


I'm due to complete on my first purchase this Friday and have also done all of this over-thinking and stressing over what now seems like nothing, lol!

IntotheAbyss

EmKnox wrote: »

I would have imagined it would probably just very slightly effect the amount the bank will be willing to lend to you. When applying for a mortgage they will ask you about any outstanding debts on cards and will ask if you intend to pay it off before completion. Just be honest.


As said before, £900 probably isn't anything to worry about. People get mortgages with much more CC debt than that.

I'm hoping it won't even be £900 if I can pay off extra each month.
I have read other posts where people were asking similar questions to mine and had much higher debt. People will always worry more about their own circumstances and I suppose I'm doing just that; stupidly worrying that my situation is vastly different somehow and something is going to go against me.

IntotheAbyss

EmKnox wrote: »

I'm due to complete on my first purchase this Friday and have also done all of this over-thinking and stressing over what now seems like nothing, lol!

I'm sure there will be more stress and over-thinking for me during the next 18 months, but it's nice to know there are lovely people on this board to help put my mind at ease :T

Hope all goes well with you this week, must be so exciting!!

EmKnox

IntotheAbyss wrote: »

I'm hoping it won't even be £900 if I can pay off extra each month.
I have read other posts where people were asking similar questions to mine and had much higher debt. People will always worry more about their own circumstances and I suppose I'm doing just that; stupidly worrying that my situation is vastly different somehow and something is going to go against me.

Completely sympathise with you! Good luck, it'll be fine!