Applying for new credit card before mortgage

BoiledBreadTomatoSauce

My partner and I will be applying for a mortgage next year. We've got the deposit money together already and I'm now at the stage where I'm just trying to hammer down my £2k credit card balance as much as possible before we apply.

My interest-free period is about to end and I have 2 options - eitjher transfer the balance to my HBOS card for a £60 fee or apply for a new card which does it for free.

Will applying for a new credit card just a few months before a mortgage application cause problems?

[Deleted User]

No, as long as you don't take the opportunity to increase your debt.

lees80

Could you not settle the balance out of your house deposit and then top that back up? Saves any fees transferring to another card etc.

hazyjo

Surely it would be better to take £2k from the deposit fund and clear it completely? They may knock that £2k plus more for risk/interest off what they will lend you anyway if you have debt.

BoiledBreadTomatoSauce

hazyjo wrote: »

Surely it would be better to take £2k from the deposit fund and clear it completely? They may knock that £2k plus more for risk/interest off what they will lend you anyway if you have debt.

We're both on relatively high salaries and are looking to borrow only about 2 times our combined salary so the credit card shouldn't make that much difference.

I'm still putting away £700 a month for the new home so if worst comes to worst I can just stop for 3 months and rid myself of the credit card debt. Really want to get going asap if I can though - fed up of our rented flat!

hazyjo

BoiledBreadTomatoSauce wrote: »

We're both on relatively high salaries and are looking to borrow only about 2 times our combined salary so the credit card shouldn't make that much difference.

Might look worse. Good money, yet still have debt on a credit card? They might see it as not handling it very well :think:

BoiledBreadTomatoSauce

hazyjo wrote: »

Might look worse. Good money, yet still have debt on a credit card? They might see it as not handling it very well :think:

Possibly, but it would be surprising if they'd outright refuse us a mortgage based on it. Our combined take home pay is a bit over £5k a month, we have 10% deposit and the houses we're looking at should only mean a mortgage of around £700 - £800 a month with no other debt except that credit card.

It probably is better just to take a couple of months to get rid of it or even down to £500 for the reasons you cite though.

asm89

If its your only debt You don't need to fully clear that balance especially given you only want 2x your joint salary. The impact on affordability will be minimal.

Speaking from experience.

Use affordability calculators on banks websites for mortgages to see what the impact is.

No point in a new CC

BoiledBreadTomatoSauce

asm89 wrote: »

If its your only debt You don't need to fully clear that balance especially given you only want 2x your joint salary. The impact on affordability will be minimal.

Speaking from experience.

Use affordability calculators on banks websites for mortgages to see what the impact is.

No point in a new CC

One of my friends is a Santander branch manager who suggested people wouldn't bat an eye at it given the loan / income ratio. I've done every affordability calculator going and it seems we'd get approved no problem. I know the reality isn't always like that but would be surprised if they refused us as has been suggested earlier in the thread.

I'll hammer the debt down as much as I can before applying, want rid of it anyway!