Remortgage, Loans & Credit Cards

SecretSally01

Hi,

Hoping someone would be able to give some helpful advice on the below situation.

Due to remortgage at the start of the new year. House value 350,000 and remaining on mortgage 210,000. If that is any help to the situation. 

I currently have 2 credit cards, both now have interest unfortunately.
Credit Card 1 -  £3,300 - Monthly payments £120
Credit Card 2 -  £3,000 - Monthly payments £80

The cards combined are meaning that I am using a high percentage of my credit utilisation and obviously with interest, looking to take a while to pay off.

I was looking into taking out a loan of £7,000, monthly payments £143 to pay off credit cards and then closing down the credit cards.

Would this be a bad thing to do before remortgage? Obviously it means reducing that high credit utilisation and the ridiculous interest and also means lower monthly payments going out. But would mean a hard search on my file? My credit score is currently very good. In my head it seems like the most sensible thing to do but would lenders see it as that? 

I do also have a personal loan that was taken out back in January for a car, £6000 remaining. But all payments made on time etc.

Losing sleep over this! Thanks in advance for any help  

amnblog

Are these credit cards on zero interest rate? If not, they probably could be and that would be less expensive than the loan.

As to re-mortgage it wont matter either way.

fergie_

Are you planning to do a product transfer with the existing lender? (usually much more straightforward with potentially no credit checks) or looking to change lender?

If changing lender, might want to speak to a Mortgage Advisor first? They will tell you what or not to do, though the loan may be a sensible option, if you can't clear off the cards.

What you haven't said is your income for affordability and with CCs, the banks tend to set an amount against your income - regardless of actual repayments.

SecretSally01

amnblog said:

Are these credit cards on zero interest rate? If not, they probably could be and that would be less expensive than the loan.

As to re-mortgage it wont matter either way.

They're not on zero interest anymore, would moving to a new 0% card not have a negative effect on remortgage?

SecretSally01

fergie_ said:

Are you planning to do a product transfer with the existing lender? (usually much more straightforward with potentially no credit checks) or looking to change lender?

If changing lender, might want to speak to a Mortgage Advisor first? They will tell you what or not to do, though the loan may be a sensible option, if you can't clear off the cards.

What you haven't said is your income for affordability and with CCs, the banks tend to set an amount against your income - regardless of actual repayments.

Haven't made a decision on staying with existing lender or changing lender. But I feel sticking with existing lender is probably the easiest and is what I will most likely do but I guess depends on rates. 

The loan is 48 months however looking into my cc's with the interest it will take around 30 years!

My income is 32,000 and partner 50,000. When we originally took out mortgage we were paid significantly less and the mortgage was for a higher amount. 

Maybe I am just thinking too much into the what if's, debt is confusing!

MFWannabe

I think you’re overthinking it; transfer the credit cards to new 0% transfer cards ASAP and then don’t get spending on them again! 

You dont say if you have any emergency fund? 

If you don’t head over to the debt free wannabe board and list your outgoings/ budget to see where all your money is going. 

You have a healthy amount coming in and should know where it’s being spent 
If you stay with same lender for the mortgage it will just be a product switch and no credit checks necessary; have you checked what rates are available?