Credit card debt threshold

Prem22

Hi all,
FTB here, I’ve noticed when inputting ‘my outgoings’ into various affordability calculators, there seems to be a threshold of around £5000 credit card debt before the offer starts to decrease, is this correct? 

 It also seems to apply to monthly outgoings like pcp/phone contracts too.

Say my max offer is £202,500 with £5000 cc debt, when I take the cc debt down to let’s says £1000 cc debt or even £0 cc debt, the offer stays the same @ £202,500, as opposed to if I change it to £6000 cc debt then the offer starts decreasing in equal amounts per £1000 cc debt more.

 The reason I ask is I have £10,000 cc debt with a salary of £46,000, I was going to reduce the CC debt to zero before I apply for my mortgage, but it seems that there’s no difference between £0 CC debt and £5000 so I might as well keep £5000 for a higher deposit?

Hope this makes sense ty

LRmortgage

Most lenders build in to the calculation some tolerance for debt / financial commitments, depending on income and other circumstances. 

It seems that you have found that tolerance threshold with whichever lender calculator you have been using. 

Caution, every lender will have a different calculation and threshold and can vary quite wildly from lender to lender. 

Thrugelmir

Affordability calculators are only guides. Much will depend on the actual lending criteria in force at the time of application. 

tim_london

Lenders will take into account the nature of the debt.

For example if its a balance transfer and you can demonstrate you have enough disposable income to pay it off if you wanted to then it is ok.  Your credit report will show that the balance is going down month by month.

If you are struggling to keep on top of interest payments or your debt fluctuates then it will be an issue. 

The computer system used by DIP is just an indication.  When you apply properly a human underwriter will check your statements in details and will determine your max eligibility accordingly.