Any risks to increasing credit limit before exchange?

Dollhouse123

I was offered a limit increase for my credit card which I was going to accept. I figured why turn down free money? But I'm in halfway through my first property purchase (already received mortgage offer but yet to exchange) and I'm not sure if accepting would affect my property purchase in anyway. What do you think?

 

Angela_D_3

Dollhouse123 said:

I was offered a limit increase for my credit card which I was going to accept. I figured why turn down free money? But I'm in halfway through my first property purchase (already received mortgage offer but yet to exchange) and I'm not sure if accepting would affect my property purchase in anyway. What do you think?

 

My credit score went up strangely 

BigD74

I believe no financial check will take place by the mortgage provider when exchanging, but understand that the provider may do a check on any change in circumstances prior to completion and transferring the funds. Not sure if an increased borrowing limit would classify as change in circumstances. 

Obviously if you use this “free money”(?) and don’t pay it off it may go against you. 

[Deleted User]

Dollhouse123 said:

I was offered a limit increase for my credit card which I was going to accept. I figured why turn down free money? 

 

I thin you've misunderstood what a limit increase is.

AdrianC

Dollhouse123 said:

I was offered a limit increase for my credit card which I was going to accept. I figured why turn down free money? 

In what way is being able to borrow (and repay, sooner or later) a larger amount of money "free money"?

Unless you're planning on using the credit above your existing limit, it makes no difference.

If you are, then can you quickly and easily repay it during the interest-free period without affecting the rest of your monthly cashflow?
If so, then it's merely a change in how you operate your normal monthly cashflow - you aren't spending any differently, just using a different payment method. But what's the benefit?

Or will it simply become longer-term borrowing, at a high interest rate, to be offset against the equity you've saved for the purchase...?

eddddy

Dollhouse123 said:

 I figured why turn down free money? 

 

In what sense is it "free money"?

• Do you mean it's a cashback (or points) card, and you'll move more of your regular spending onto the card?
• Or do you mean it's a 0% interest spending card, and you'll keep your cash in a savings account instead to earn a bit of interest?

Either way, mortgage lenders might do a new credit check on you any time up until completion. It might be best not to do anything to your credit record which might 'spook' them. Especially if the only benefit is to earn a very few pounds in cashback or interest.

Angela_D_3

Thing is being offered the credit limit increase is very different from requesting one.  

Mineral1

Personally i'd just decline, your lender accepted you on the basis of your current status so i'd try to keep as close to that as you can. After completion do what you please.

eddddy

Angela_D_3 said:

Thing is being offered the credit limit increase is very different from requesting one.  

If the mortgage lender does a credit reference check and sees the increased credit limit, will the credit check say why the limit was increased? (i.e. Whether it was offered or requested?)

Might the lender be worried that the homebuyer has requested/accepted a credit limit increase, in order to go on a spending spree when they move into their new property? (Which might impact their ability to make mortgage payments.)

Maybe it's a small risk, but why take that small risk unnecessarily.

Dollhouse123

I haven't quite figured out how to reply to an individual post yet. But thanks for all the advice and the helpful comments. 
It sounds like it'd be best to err on the side of caution until I complete. 

Also I wasn't aware people would take my 'free money' comment so seriously! I clear my balance every month and only wanted the increase to improve my credit score... I'll know for next time not to put any half jokes in a post, it just doesn't translate well in a forum. 

MaryNB

Dollhouse123 said:

I haven't quite figured out how to reply to an individual post yet. But thanks for all the advice and the helpful comments. 
It sounds like it'd be best to err on the side of caution until I complete. 

Also I wasn't aware people would take my 'free money' comment so seriously! I clear my balance every month and only wanted the increase to improve my credit score... I'll know for next time not to put any half jokes in a post, it just doesn't translate well in a forum. 

This is the crux of it. Even if there's a 1% chance if could affect your mortgage application, you mortgage is the biggest credit application you'll make so not worth taking any risk, especially if you don't need it the extra credit card limit. If you need it later down the line you could always request it again in a few months.