Loan offers reduced from £25k to £7k

BrianW2022

Devongardener said:

”At the end of this month we could technically clear the credit card debt but this will take all the money we have towards the mortgage deposit and auction fees from the sale and set us back too far and prevent us from being able to proceed and time restrictions are a key issue for us.”

Are you buying at auction?   If so do you know if your mortgage company will release funds on a property they will not have a chance to approve?

Yes but it at a fixed price so no bidding involved. Mortgage advisor already sent a surveyor out.

BrianW2022

MrFrugalFever said:

I have never heard of a mortgage lender allowing credit to form part of the deposit payment (in fact even the conveyancer will check this), must be a new thing? Can I ask which lender it is?

Taking out additional credit during a mortgage application could lead you to a failed mortgage offer, or worst, a rejection of drawdown after exchange of contracts which means that you legally have to complete the sale as if you don't you could be sued by multiple parties within the chain.

i would double check the validity of a personal loan once again and avoid taking any credit during an application. Personally i'd find another way to raise the £13k (save up for it would be the best course of action or at worst a gift from someone perhaps).

Sure, it is with Santander. There is an option on the mortgage application you can select for personal loan for the deposit. There are a few lenders now I believe that will consider it as long as your affordability checks work out.

We would prefer to save for it but our circumstances are forcing our hand as we need to be in a place in the next few months due to our living situation.

BrianW2022

Mr.Generous said:

In really basic terms the lender would be considering that if you can easily afford it, and if you can pay it off so easily then why do you have the card debt and why haven't you saved for the deposit? If you can't save anything without the mortgage what will change to enable you to pay the deposit loan, the mortgage and all the new home expenses?

Just pay off the cards and save a deposit, far less hassle if you start off home ownership with a clean (ish) slate.

I am able to save and have been the last few months but partner has only just started her new job 2 weeks a go so going forward we will be saving a lot more. As mentioned elsewhere our circumstances are that we need to find somewhere in the next 3-4 months so having to get creative about how we get things sorted. As for the card debt, it is the last of our debt we have so once cleared we are debt free (apart from up and coming mortgage and loan)

deersmith4

Emmia said:

BrianW2022 said:

Hi Emmia, thanks for replying.

No I kept the other cards open. I believe that is it good to keep cards active as closing them can affect credit ratings as it reduces the credit you have available. 
Apart from the £4400 I have at the moment they don't get used at all as I used them over several years to build my credit rating up. As it stands they are all at £0 except for this one and I plan to keep it this way.

I am not worried about the existing debt as its on a 0% interest card which I can easily pay off before the rate ends.

It is the loan offer bit that I am really trying to resolve as this is what is preventing us moving forward. We have done extensive budgeting to work out are affordability for the mortgage and loan and they come in well under what we can afford.

The lender doesn't know that you're not going to max out the cards again.

You've essentially doubled your access to credit (and risk of debt) and you're applying for a loan which will increase your debt level further. 

I suspect you can't service max levels of debt on all your cards + loan (+ mortgage eventually) and that's why the offers have dried up.

This is such useful advice!  I thought like BrianW2022 that one should keep old credit card and not use them to make sure your credit history stays good.  But now that you've illustrated that it means the amount of possible debt can be perceived to be higher, it makes sense.  Going to cancel my old credit card accounts now.  

Nasqueron

Closing old credit card accounts is not a good idea, at the very least the disruption will cause problems on your credit history - it looks like you are having credit withdrawn as you're a risk. Keep cards, spend on them monthly, pay back in full, keep a good credit history going.

Emmia

Nasqueron said:

Closing old credit card accounts is not a good idea, at the very least the disruption will cause problems on your credit history - it looks like you are having credit withdrawn as you're a risk. Keep cards, spend on them monthly, pay back in full, keep a good credit history going.

The level of availability of credit may be more of a risk than lenders wish to take, personally I'd close them - the "damage" to your file is minimal. 

Nasqueron

OP describes having £4400 of debt over a few cards and had a BT card with a limit of £4500 - these are relatively low limits and I for one have way more credit available than that and have only ever had 1 issue with a card I speculatively applied for, didn't get but 3 months later got another with no issue and one of my providers just this month upped my limit by 25%. I think I have somewhere close to 100% of my salary in available credit. Unless you have something solid in writing from lenders that available credit (rather than debt) is bad then I would suggest the advice you gave is flawed - not least because the overall utilisation will hugely shoot up if OP only has 1-2 cards left. Alternatively, paying the cards off every month after small amounts of spending shows responsible borrowing and builds a positive credit history

Emmia

Nasqueron said:

OP describes having £4400 of debt over a few cards and had a BT card with a limit of £4500 - these are relatively low limits and I for one have way more credit available than that and have only ever had 1 issue with a card I speculatively applied for, didn't get but 3 months later got another with no issue and one of my providers just this month upped my limit by 25%. I think I have somewhere close to 100% of my salary in available credit. Unless you have something solid in writing from lenders that available credit (rather than debt) is bad then I would suggest the advice you gave is flawed - not least because the overall utilisation will hugely shoot up if OP only has 1-2 cards left. Alternatively, paying the cards off every month after small amounts of spending shows responsible borrowing and builds a positive credit history

The OP has already doubled his access to credit by shifting debt to a 0% card but didn't close the now empty cards.

They now wish to get a loan too to provide a deposit for a house - the lenders don't know he won't max out his old open cards so that places him at higher risk of accruing debt he won't repay from the lenders perspective... Hence his loan offers drying up. 

Your access to credit is irrelevant to the OP, it is the OPs access and risk level which matters.

Edit: your advice is good if someone wishes to build/improve their credit history but that isn't the case here.

Nebulous2

This is an argument I've had in here a few times. Years ago there were a lot of posters here who said credit limits made very little difference. Now posters seem to have swung to claiming that you are judged by your available credit and its a bad thing to have high credit limits. 

I'm not convinced. I've had over my annual income in credit limits for about 30 years. At times I've had over twice my income. For years every card I applied for gave me a £10k limit. I thought they looked, saw that was what other lenders had given me, and decided to give me the same. 

Lenders like stability. A lot of changes can worry them, as they don't know what is going on. It may well be that some fresh hard searches on his account is an issue, opening a new card might be an issue, but having a high credit limit will be well down the list of risk factors for the lender. 

Nasqueron

Emmia said:

Nasqueron said:

OP describes having £4400 of debt over a few cards and had a BT card with a limit of £4500 - these are relatively low limits and I for one have way more credit available than that and have only ever had 1 issue with a card I speculatively applied for, didn't get but 3 months later got another with no issue and one of my providers just this month upped my limit by 25%. I think I have somewhere close to 100% of my salary in available credit. Unless you have something solid in writing from lenders that available credit (rather than debt) is bad then I would suggest the advice you gave is flawed - not least because the overall utilisation will hugely shoot up if OP only has 1-2 cards left. Alternatively, paying the cards off every month after small amounts of spending shows responsible borrowing and builds a positive credit history

The OP has already doubled his access to credit by shifting debt to a 0% card but didn't close the now empty cards.

They now wish to get a loan too to provide a deposit for a house - the lenders don't know he won't max out his old open cards so that places him at higher risk of accruing debt he won't repay from the lenders perspective... Hence his loan offers drying up. 

Your access to credit is irrelevant to the OP, it is the OPs access and risk level which matters.

Edit: your advice is good if someone wishes to build/improve their credit history but that isn't the case here.

Having lots of credit available shows lenders trust you, suddenly closing all the cards but one, not only whacks up the utilisation (however relevant, or not, that is for lenders) but looks like a problem as they don't see why the card was closed, only that it was - in short, closing the cards per your advice makes it look to a lender that potentially the other issuers were spooked by something and closed their accounts making OP's credit record worse.

The drop in credit availability is likely due to both the hard search for the card and repeat checking for loans even without hard searches plus the fact they are carrying debt on the card. 

The best advice would be to leave the cards alone, keep spending on them and paying off in full every month (contrary to your post, OP does need to keep improving their credit history to show they are a responsible borrower and get access to loan offers) and keep paying down the card debt especially if they are only making minimum payments - save once the debt is gone.