Usage of Credit Card before Mortgage Approval

DaffyDuck316

Hi everyone,

I recently had my offer to buy a house accepted. I did end up increasing my offer which has left me a bit stretched for money. I feel this is Ok as I have opportunities for overtime and can save while the process continues. I'm currently a tenant in the house I am buying and being chain-free takes the weight off a little.

I plan to use my current account to pay for my deposit. I must stress I don't plan to use my overdraft to fund my deposit.

What I am wondering is if perhaps I can use my credit card to pay for a survey to be done. Is it ok to have a little credit card debt in the background?

Brie

Yes - no problem with having some CC debt.  A bank won't be at all surprised by this.  If the rest of your credit history is in good condition there should be no problems - in my opinion.  But do check your credit history to see if there's anything that might want a bit of tidying up.  

DaffyDuck316

Hi Brie,

That is music to my ears, thank you, and will do.

DaffyDuck316

Hi all,

I'm just wondering if anyone else could weigh in. My affordability was on the cusp and I have recently placed my disbursements and surveyor fees on my credit card. Do you think that credit card debt would make a difference in the eyes of the mortgage lender? I could quite easily pay these fees off by completion.

TheSpectator

How much are we talking?

DaffyDuck316

About 1500

EssexHebridean

If you can easily pay it off, then pay it off? You’ll no doubt have plenty of expense one you have moved buying things for the new property, so there is no sense in carrying debt you don’t need to across with you too, and equally, it’s pointless paying interest (assuming this is not a 0% card) when that money would do better in your pocket! 

Personal, if affordability was on the cusp anyway, I wouldn’t want to risk a CC with a position of anything other than “cleared monthly in full” if I had a mortgage application in play, and particularly if I didn’t need to be carrying that balance. 

DaffyDuck316

It is something I can easily pay off but it will just take a bit of time, like six weeks. Maybe I can figure out a way to pay it in full in two weeks and fall back into it for another month. I think there will be at least six weeks before completion. 

DaffyDuck316

Perhaps I can use my tenancy deposit as an asset? The house I have the tenancy deposit with is the house I am buying. That would give me enough money to pay off my CC. I feel so close to getting this across the line.

EssexHebridean

Have you put together your budget for your post purchase situation yet? It sounds as though you are making this purchase without much of a contingency or emergency fund behind you and that’s not an ideal situation to be in. Handily you already know what your utility bills will be going forwards, but you will have other changes like life and buildings insurance to consider, and once you are a homeowner a robust emergency fund is a must. I’d suggest that you get that budget sorted urgently so you can see where you stand and where you may need to make savings. 

DaffyDuck316

Thanks, that is definitely worth checking out. I feel I have everything in order in that regards I just wasn't expecting to buy a property, but the opportunity presented itself just after I paid for some dental work. I plan to use my CC for emergency funds initially but I will certainly be saving up some contingency funds in the long term.