A potential first time buyer looking for credit card advise...

ELTOMLIN

Hello all, 

I am a keen money-saver after many years of overspending. I have managed to reduce my debt to £3000 on a 0% balance transfer credit card, my 0% period is ending in April, so I would usually apply for a new one and continue to pay it off gradually, however, I am building a house which is due to be complete in August and will I be applying for a mortgage. 

Will applying for a new balance transfer credit card now affect my mortgage application in August? Should I just pay the interest rate until the mortgage application is complete? 

Any advice is welcome, thank you!

[Deleted User]

It would affect your mortgage potentially as you would have more credit available but a single search is probably not the biggest concern here - if you are carrying debt and are struggling to pay it off before the end of the BT deal, particularly if you are paying interest, it will make you look less attractive to lenders, so maybe focus on that first e.g. using savings to clear it down

Chris_English

The persistent debt is likely to be much more of an issue than whether you've applied for a new card or not. Moving into a new house can bring all manner of bills with it; it'd be more usual to do it with some savings behind you rather than starting with nothing in the bank and debt that you are having to juggle between cards.

Any lender is going to take the debt into account, so woudl it not be possibe to use some of your saved deposit to clear it, and then work as hard as you can to build that deposit up again (plus some savings on top)?

eskbanker

ELTOMLIN said:

I am building a house which is due to be complete in August and will I be applying for a mortgage.

[...]

my mortgage application in August

Out of curiosity, how are you funding all the costs involved in building a house if you don't already have a mortgage but expect to need one after completion - whether that's savings or credit, in whatever form, I'd have thought that the £3K pales into insignificance relative to everything else?

ELTOMLIN

eskbanker said:

ELTOMLIN said:

I am building a house which is due to be complete in August and will I be applying for a mortgage.

[...]

my mortgage application in August

Out of curiosity, how are you funding all the costs involved in building a house if you don't already have a mortgage but expect to need one after completion - whether that's savings or credit, in whatever form, I'd have thought that the £3K pales into insignificance relative to everything else?

We are building with a building firm so have paid a % and have to pay the rest once it has been built, with a mortgage. 

I have savings but I was planning to keep them to cover kitchen, flooring, and furniture costs that we will have when we move in. 

I was hoping it would be insignificant on the application, however, I know a hard search within a year of application can be frowned upon. 

Thank you all for your advice, I may reprioritise and be without a sofa for a little while and pay this off first  

penners324

The debt will be significant, 1 credit search and a new card, not quite as much.

Brie

If you have savings why not use them to clear the debt on the card rather than get another.  Once you need the cash to buy the other stuff you'll have your mortgage in place, have a credit card available and can then look at getting another or some sort of card if required.  Potentially you could even get a nice 0% purchase card.  

eskbanker

Sounds sensible - if you have savings that you can use to repay the £3K when the 0% ends, then not carrying a debt at the time of applying for the mortgage is likely to work in your favour.  Once you have the mortgage, you could always apply for a 0% purchases card for additional liquidity post-completion, to cover the furniture, etc, if saving again would take too long....