Advice - Unable to remortgage due to credit card balances

liamf2010

Hi, if anyone can offer me any advice it would be very much appreciated.

I'm a first time poster and only found this forum today, but we've just come back from the bank quite worried about what to do next. We went in to enquire about remortgaging, as we know from the market our property has increased significantly. The purpose of doing this was to consolidate all of the credit card debt we-ve built up and hopefully have a little spare to start some savings.

Unfortunately this was rejected due to affordability, owing to the credit card balances. We already knew this would happen, but naively had believed that it would be taken into account that these would be paid following the remortgage. We've obviously since found that this is not the case and whilst those credit cards have the balances they have, we won't be getting a new mortgage.

This has left us worried, due to this always being the plan. We have to get a new mortgage to buy out our help to buy loan for the property at some point and wrapping up the credit card balances was also part of the plan. Now that we can't do that, and we have no way of getting the funds to clear them, we are lost as to what to do next.

If was Halifax we went to see today and I know it'll be suggested we try someone else, but will they not do a similar affordability check? We already have a personal loan, but even if we didn't, I guess we'd fail the affordability check anyway.

We both have great credit scores, both working and the bank told us without the credit card balances we would qualify for an additional £70k. That would be enough to settled the Help to Buy and our credit card debts, but due to the CC debt we can't.

This makes no sense to me when the issue preventing us from getting anywhere is the issue that will be settled afterwards anyway. We can qualify for what we need, pass the credit checks, pay the credit cards and Help to Buy and get on with our lives.

Thanks for reading

BoGoF

What makes you think you look a good prospect to a lender? Sounds like you have accumulated a substantial cc debt since your last mortgage. Why is that?

Your 'credit scores' mean nothing in the real world.

There may be options with other lenders but, yes, you have been naive.

Hungary971

We found Halifax offered us less try nationwide calculator

[Deleted User]

You need to clear your CC debt down.

Get that done then apply or go via a broker rather than direct to a lender

kingstreet

With which lender is your existing mortgage?

LRmortgage

Get a broker to have a look at the whole picture for you.

All lenders assess affordability different, just because it doesn’t work with Halifax, it doesn’t meant it won’t work with another lender.

Get a local, independent broker to advice you on whether this can be done in your current situation or what you need to do to make it happen in the future.

Kentish_Dave

As above, you need to reduce your credit card debt and try again.

Lenders will see you living beyond your means and using rising house prices to let you move it onto your mortgage and will be rightly worried about what the end point is if the cycle continues.

If you are spending more than you earn then what’s your endgame regarding paying the mortgage off?

csgohan4

some lenders don't like the reason to take equity is for debt also.


Looks like sort the CC asap or get a broker to get your options.


Don't count your eggs till you actually have them, which you have made the mistake of. Lenders won't always do what you want

ACG

If you told them your credit card balances would be cleared with the new mortgage then it would not fail affordability because of them (unless something has changed).

It probably means they will not lend enough for you to remortgage and clear the credit cards. Not all lenders use the same affordability calculations so it may be possible to get more elsewhere.

Thrugelmir

Suggest you pay a visit to the Debt Free Wannbe forum. Consolidating debt provides a solution but not the answer to the underlying issues. Highly possible that Halifax have detected a trend with regards to your unsecured debt levels. Take remedial action and make an effort to start reducing it with immediate effect.

AliceBanned

I agree with posts above about money management. Particularly with Help to Buy, and even without it, lenders are scrutinising our lifestyles much more closely than they used to and don't want any hint of risk.


I saw an independent broker as was in the same position. He has told me I can borrow an additional £160k when I remortgage BUT to come back to him when my credit card balances are zero, or at least they will be when the new mortgage begins. Unless I do this I can only increase my mortgage by a much smaller amount.


It seems unfortunate and it is taking some time for me to resolve but I feel better for it - I went to the Debt Free Wannabe board and got loads of helpful advice. It will be better for you in the long run if you can start and stick at debt repayment yourself as we can all fall into the trap of consolidating and not actually taking a long hard look at our budgets.