Over pay mortgage or credit card

Alex_lol

Hello,
After some advice please.
I would like to get a bigger mortgage to move house. My lender won’t lend me anymore but has advised I can overpay my existing mortgage which may help to prove I can afford more. I am on a interest only mortgage and they won’t even let me move to repayment.
Main problem is not affordability but the amount of borrowing in my name.
Do you think this will help me or would it better to pay off credit cards debts rather than over pay mortgage?
Ultimate goal is to get a lender to recognise I can afford a bigger mortgage.
many thanks!

foxy-stoat

How much do you owe on your credit cards?

Retired_Mortgage_Adviser

Alex_lol said:

Main problem is not affordability but the amount of borrowing in my name.Ultimate goal is to get a lender to recognise I can afford a bigger mortgage.

Amount of borrowing impacts affordability (for lender calculations). For instance if you have 20,000 credit card debt, lenders will take deem a percentage of it (around 3%) ie £600 as monthly outgoings, thus reducing your affordability.

If your goal is to improve affordability (as defined above), reducing significant unsecured debt should help.

Just to be clear, the above is very generic guidance.

Setting affordability aside, choosing between overpaying mortgage vs paying off interest-accruing credit card debt, in most cases it's a simple exercise of comparing interest rates - credit card (usually 15%+) vs mortgage (usually much much lower). 

Retired_Mortgage_Adviser

If you feel comfortable sharing some basic information, that might help with getting a bit more tailored information -

- house value

- outstanding mortgage, remaining term

- income

- cc debt

- lender, current interest rate

Alex_lol

Thank you for your help!
house value £190k mortgage £132k, about 13 yrs left with Accord mortgages.
Joint income £75k
Credit card debt approx £19k

Thrugelmir

Suspect that your credit card utilisation maybe the issue for your current lender. Coupled with the fact that your current mortgage is interest only. Borrowing more on a repayment basis is going to increase your outgoings considerably. Do you have savings or are all the costs of moving going to come from the equity in your existing property? 

Alex_lol

Majority will come from house sale.
We may also be able to clear some
credit card debt too from the sale of the house