Credit card balance - application

JackRH93

Just looking for some advice.

I am going to be applying for a mortgage in a couple of months. I currently have nothing at all on my credit card. I just wondered if there is a balance they would just not consider in the application as it would just be general months spending to be cleared in full?

For example, if I had £700 on the credit card but planned to pay it off in full the next month would that be considered in my application? If it was factored into affordability, do they split it over a year or something?

The credit limit on the card is £5,500 if that matters at all so it's not like I would be anywhere near maxing it out.

Retired_Mortgage_Adviser

No, if you're clearing the full balance every month, it will not be factored into affordability.


Even otherwise, if you were carrying forward a credit card balance of £700-1,000, it will only have a tiny impact on affordability, as an assuming outgoing of approx 3% of the balance, so £30/month for a £1,000 balance.

JackRH93

Thank you for your reply.

And if I don't clear the full balance, is it then factored in?

I only ask because it might help to only make a small payment to the credit card balance one month to make sure we don't run short of cash for fee's etc, by my workings we should be fine but I just don't want to get to a stage where things are tight.

Retired_Mortgage_Adviser

If you intend to carry forward a balance on your credit card, you should declare that to your broker/adviser who will then factor that into your affordability calculations to determine whether the mortgage you require is affordable or not.

As I said, this is how it is treated if you were to do so -

Even otherwise, if you were carrying forward a credit card balance of £700-1,000, it will only have a tiny impact on affordability, as an assuming outgoing of approx 3% of the balance, so £30/month for a £1,000 balance.

So, unlikely to be a game-changer unless you are on the very edge of affordability.

JackRH93 wrote: »

Thank you for your reply.

And if I don't clear the full balance, is it then factored in?

I only ask because it might help to only make a small payment to the credit card balance one month to make sure we don't run short of cash for fee's etc, by my workings we should be fine but I just don't want to get to a stage where things are tight.

JackRH93

Sorry, didn't notice that last comment somehow. Thank you very much for your help.

Retired_Mortgage_Adviser

Sorry, I added it on as an edit! Hence why you might have missed it. Good luck!

JackRH93 wrote: »

Sorry, didn't notice that last comment somehow. Thank you very much for your help.