Pay credit cards or overpay on mortgage?

Muggers1

Hi, our mortgage is due for renewal in February 2024. Which option would make us look more attractive to lenders ... paying down our credit cards (£15k on three 0% cards which have 18 months -2 years remaining on 0% rate) or overpaying on our mortgage (£330k on 1.9%) to improve our LTV? Thank you

dimbo61

The monthly repayments on your £15K credit card debt maybe half your mortgage payment each month so lenders look at affordability so for me I would pay down the CC debt first.
Unless your paying the what 3% minimum  each month and will still  be paying the CC debt in 30/40 years at that rate.

housebuyer143

If you need the maximize your borrowing then pay down the cards as they will take a huge chunk off what you can borrow. If you have enough affordability without doing so, then don't and also don't pay the mortgage, instead put the money in a savings account paying double your mortgage rate. 

K_S

@muggers1 What impact the credit card debt may have on your chances of doing a like-for-like re-mortgage will depend on the numbers.

With most mainstream lenders, the credit-card debt is considered as a 3-5% / month outgoing. So for 15k of debt, that would be an outgoing of £450-750. Whether the credit-card is on 0% or 20% doesn't make a difference.

Whether or not an outgoing of £450-750 makes a difference to borrowing 330k largely depends on your income, age (because it impacts maximum term), LTV, etc. For example if you earn £100k and are in your 30s, the cc debt is unlikely to make a difference. Otoh, if you earn £80k and are in your late 40s, then the impact might be different. I hope that makes sense.

To get a very very rough idea of whether or not it makes any difference, you can plug in your numbers and play around with a couple of lender affordability calculators and see whether it allows you to borrow what you need with the cc debt.
https://www.halifax-intermediaries.co.uk/tools-calculators/mortgage-affordability-calculator.html
https://online.accordmortgages.com/public/mortgages/quick_enquiry.do

I myself don't see a benefit to overpaying mortgage debt at 2% when you can get close to 4% in easy access savings. When it comes to re-mortgage time, in most scenarios, you should be able to use any surplus cash you have in savings towards reducing your LTV.

Muggers1 said:

Hi, our mortgage is due for renewal in February 2024. Which option would make us look more attractive to lenders ... paying down our credit cards (£15k on three 0% cards which have 18 months -2 years remaining on 0% rate) or overpaying on our mortgage (£330k on 1.9%) to improve our LTV? Thank you