Credit card for a first time homeowner

Brokenlynx

Hi all, 

I'm about to complete on a property this week and am beginning the process of buying some essential items of furniture for the new home.

I have just over £5,000 available to buy some of these items but would need to bolster this a little to be able to get most of the things I'll need. 

With this in mind I'm looking to potentially getting an interest free credit card with a longer term interest free period, ideally at least 14 months.

I have a good credit history with no arrears and would be looking for about a £3000 limit minimum. I also have two credit cards, both of which I'll be closing soon within the next couple of weeks that both have zero balances.

Having looked at the eligibility checked I see a Tesco bank card offering 14 month interest free period (95% pre-approval). And a Sainsbury's bank card with a 21 month interest free period (estimated 60% pre-approval). 

Is it worth me applying for one of these cards after the mortgage begins in the coming days or should I wait until later? Also given the situation I've outlined above are there alternative ways (other cards or other methods) I could use to procure the additional cash required for purchases such that I can spread payments over a long interest free period? 

Thanks in advance.

MorningcoffeeIV

Don't close your existing cards, whatever you do. Don't give the impression that no lender trusts you anymore.

You can apply once you've completed, but you may need to wait a few months before you're accepted.

silvercar

Definitely don’t apply until after the mortgage has completed.

Martico

I second both of those comments.
Don't do a thing until the mortgage comes through. The last thing you want is new credit activity before such an important deal.
There's probably little benefit to be gained from closing existing cards. The fact that you close them may actually put off future potential lenders, as they won't know the reason for you closing them before you ask for new credit.
If you can get a decent term 0% spending card, then great, go for it. And in the meantime, there's a chance that one of your existing cards will offer you a 0% balance transfer, in which case you could shift the credit from your 0%spend card.
Whatever you do, of course, ensure that you can pay off any card in full before the deal ends.
Happy homeowning!

Brokenlynx

Appreciated, thanks for the help. 

I was under the impression that reducing the amount of credit I have available would be a positive in the period after the completion. Seems that's not the case 😅

Is it right to assume that credit reports put more weight on the actual credit being used (i.e: owed balance) of someones cards compared to the potential credit they could use (e.g: the sum of all credit limits)?

Ebe_Scrooge

Brokenlynx said:

Is it right to assume that credit reports put more weight on the actual credit being used (i.e: owed balance) of someones cards compared to the potential credit they could use (e.g: the sum of all credit limits)?

What the credit reference agencies think of you is immaterial, given that they're not the ones lending you money.  A lender will make their own mind up, based on cold hard facts.

The amount of available credit may have a small impact, but the amount of debt you're actually carrying will be far more significant.  To use a broad generalisation, if there's anything that makes it look like you're struggling, even in a small way, to repay what you currently owe, you'll have a hard time getting further credit.  I'm not saying that's the case for you personally, but it's kind of how lenders will look at people in general.

So, as others have said, absolutely do not go applying for further credit until the mortgage and house purchase is done and dusted.  The other thing to consider is how essential the new purchases are.  Can you make do with what you've got for a few months?  Can you buy second-hand stuff to tide you over for a few months?

Of course I know how exciting a new house is, and how most people want to make it "just so".  But with pretty much any house, there are things that'll break or need repairing.  Being saddled with debt is not the ideal situation to be in, you need to be able to pay for any repairs that may be required in the first few months.  Hopefully that won't happen, but it pays to be prudent and plan ahead for such things.

Just my thoughts, hopefully it's of some help.

Brokenlynx

Ebe_Scrooge said:

What the credit reference agencies think of you is immaterial, given that they're not the ones lending you money.  A lender will make their own mind up, based on cold hard facts.

The amount of available credit may have a small impact, but the amount of debt you're actually carrying will be far more significant.  To use a broad generalisation, if there's anything that makes it look like you're struggling, even in a small way, to repay what you currently owe, you'll have a hard time getting further credit.  I'm not saying that's the case for you personally, but it's kind of how lenders will look at people in general.

So, as others have said, absolutely do not go applying for further credit until the mortgage and house purchase is done and dusted.  The other thing to consider is how essential the new purchases are.  Can you make do with what you've got for a few months?  Can you buy second-hand stuff to tide you over for a few months?

Of course I know how exciting a new house is, and how most people want to make it "just so".  But with pretty much any house, there are things that'll break or need repairing.  Being saddled with debt is not the ideal situation to be in, you need to be able to pay for any repairs that may be required in the first few months.  Hopefully that won't happen, but it pays to be prudent and plan ahead for such things.

Just my thoughts, hopefully it's of some help.

Good advice, appreciated. I'll bear it in mind. 

Marchitiello

Martico said:

I second both of those comments.
Don't do a thing until the mortgage comes through. The last thing you want is new credit activity before such an important deal.
There's probably little benefit to be gained from closing existing cards. The fact that you close them may actually put off future potential lenders, as they won't know the reason for you closing them before you ask for new credit.
If you can get a decent term 0% spending card, then great, go for it. And in the meantime, there's a chance that one of your existing cards will offer you a 0% balance transfer, in which case you could shift the credit from your 0%spend card.
Whatever you do, of course, ensure that you can pay off any card in full before the deal ends.
Happy homeowning!

These comments always puzzled me.. Closed account by users show as settled, there is no underlining issues with it, I have done plenty of re-organisation of cards, closing 6-7 cards at the time and applying for new ones… Settled credit account show in the same lights as a paid off loan, mortgage, car finance, settled Utilities accounts: you can actually manage a credit line entire life. Only argument would be to keep your oldest CC account for continuous history 

Brokenlynx

Marchitiello said:

These comments always puzzled me.. Closed account by users show as settled, there is no underlining issues with it, I have done plenty of re-organisation of cards, closing 6-7 cards at the time and applying for new ones… Settled credit account show in the same lights as a paid off loan, mortgage, car finance, settled Utilities accounts: you can actually manage a credit line entire life. Only argument would be to keep your oldest CC account for continuous history 

Interesting, this contradicts the earlier post, but makes sense, if a lender can see an account is settled without issue, I'd assume that would be a plus? 

I've completed now but would welcome any further opinions on the best ways to get credit in the few months immediately following the completion.
 

martinbainbridge1975

halifax had 17 months on 0% purchases

Alex9384

Marchitiello said:

These comments always puzzled me.. Closed account by users show as settled, there is no underlining issues with it, I have done plenty of re-organisation of cards, closing 6-7 cards at the time and applying for new ones… Settled credit account show in the same lights as a paid off loan, mortgage, car finance, settled Utilities accounts: you can actually manage a credit line entire life. Only argument would be to keep your oldest CC account for continuous history 

It may show as settled but the new lender might still assume that the old lender simply closed your account because they didn't like something about you. They can't see whether the account closure was initiated by you or your credit provider.They just see that the account was closed.
Banks like to be paranoid and tend to assume the worst things about you as their customer. Like, for example, with my 2 credit card balances still on 0% period. They seem to think that I'm struggling to pay it off, when in fact I'm just trying to make most of the 0% period. None of my overdrafts has ever been used overnight and I also have other credit cards with barely any balance on them. Banks can be really clueless pretty often. The only thing they are consistent at is that they will assume the worst about you.