Closing credit cards before house completion?

moneysaver1978

We have a couple of credit cards that while we clear balances every month, they are not giving us much benefit in terms of points or cashback so we were thinking of closing them for a new credit card.

We have already exchanged for a new house and expect to complete by end of this month, so a 0% credit card might be useful for furniture purchases and DIY projects!

But is that too risky with the mortgage, etc.? Should we wait till we move or no difference?

CliveOfIndia

moneysaver1978 said:

But is that too risky with the mortgage, etc.? Should we wait till we move?

Yes and yes, absolutely.  It's never a good idea to take out any new lines of credit just before completion - most mortgage lenders will run a final credit check just before completion, and if there's any changes that make them jittery, you could find they alter the terms of the mortgage offer.

moneysaver1978

CliveOfIndia said:

moneysaver1978 said:

But is that too risky with the mortgage, etc.? Should we wait till we move?

Yes and yes, absolutely.  It's never a good idea to take out any new lines of credit just before completion - most mortgage lenders will run a final credit check just before completion, and if there's any changes that make them jittery, you could find they alter the terms of the mortgage offer.

Good to know, thank you! We will wait then.

Does this apply also to any 0% finance (to spread the costs) like John Lewis, DFS, etc.?

CliveOfIndia

moneysaver1978 said:

CliveOfIndia said:

moneysaver1978 said:

But is that too risky with the mortgage, etc.? Should we wait till we move?

Yes and yes, absolutely.  It's never a good idea to take out any new lines of credit just before completion - most mortgage lenders will run a final credit check just before completion, and if there's any changes that make them jittery, you could find they alter the terms of the mortgage offer.

Does this apply also to any 0% finance (to spread the costs) like John Lewis, DFS, etc.?

Yes.  It's still a debt that you owe (and which will be recorded on your credit file), whatever the rate of interest may be.

Fighter1986

Having said that, for us HSBC didn't perform any follow up searches in the six months between offer of mortgage and completion.

If you aren't increasing your overall debt level it shouldn't matter at all, if you're simply closing an old card and taking out a new one but not spent on it yet, you have no more liabilities against your name than when you applied for a mortgage - and this is how mortgage affordability is calculated - it is based on what you owe, not on what you could potentially owe. 

moneysaver1978

I wonder if making a new credit card application from the new house (with 0 years of history living there), might result in a declined result (and unnecessary hit on the credit rating) but definitely feels a lot less risky than losing the mortgage!

MorningcoffeeIV

Possibly. But you can ignore the hit on your credit rating.

All it will be is a search.

martinbainbridge1975

moneysaver1978 said:

I wonder if making a new credit card application from the new house (with 0 years of history living there), might result in a declined result (and unnecessary hit on the credit rating) but definitely feels a lot less risky than losing the mortgage!

normally ask for 3 years address history if i remember rightly so you may have to put old address details in as part of the application.