Money set aside for Stamp Duty - Should I pay down debt instead?

Dave_Z

Hi All,

Expecting to submit our application for a mortgage this week, but wanted to get some opinion on what to do with some 'spare' cash.

Bit of background.  We're buying a new-build that is just about ready to move in and the house-builder is our cash buyer as part of a part-ex scheme.  So, we expect things will move fairly quickly.  We have £30k of CC debt between us and as part of the initial qualification conversation with our broker, we'd agreed that £30k of our equity would be held back to pay this off.  Broker seems very relaxed about it and says the lender won't take the debt into account if we say we're paying it off with some of the equity. 

My parents have gifted us some money to cover SD, legals, moving costs, etc, so that we can maximise our equity being used as deposit.  I've suggested to the broker that I should use most of this gifted cash to pay off some of the CC's now, so that we might only have £15k of CC debt to repay from the equity, with the other £15k going on SD.  It seems a sensible thing to do, but I was concerned, due to the timeframes, that the debt won't clear from our credit record in time so it may look as though we still have the debt and don't have spare cash for the SD.

Our broker has said it'd be best to stick with plan A and hold onto the gifted cash.  I'm just anxious because I've seen various references to people paying off debt with equity and how lenders will look at plausibility when considering to accept this.  Surely, if I could demonstrate that I'd paid off half the debt, it would be better for my application? 

Or maybe I'm just getting in a flap over nothing and should follow my brokers lead?  Maybe if it did become a sticking point we could offer to clear half at that point. 

amnblog

Effectively you are saying "if I pay off £15,000 of credit card debt now, will that advantage me over paying it off on sale".

Apart from saving interest on the card (if you are not on zero interest) I do not see how it makes any difference.

Why not ask the builder to cover your SD as a sweetener?

Dave_Z

Fair do.  I'm glad to hear another broker echo the same thoughts as mine, thanks.

We already got £15k of upgraded kitchen and carpets for 'free', so I don't think we'll get stamp duty as well.

amnblog

Dave_Z said:

Fair do.  I'm glad to hear another broker echo the same thoughts as mine, thanks.

We already got £15k of upgraded kitchen and carpets for 'free', so I don't think we'll get stamp duty as well.

Don't ask - don't get

Check when the builder's trading year ends. If it is September or March they are coming to a point where they will want sales sorted. At that stage they are more likely to give out deals to secure sales.