Mortgage & Credit Cards

abc.xyz

Hi folks

I'll be applying for a mortgage in the next 3-6 months and was wondering whether my credit cards will impact my ability to get a good deal. My salary is £39k and I'll be the sole applicant. I've been told that too much credit as a proportion of income can scare lenders? I have 4 cards:

Lloyds: Limit: £10k. Balance: varies (used for all expenditure and paid off by monthly DD)
Halifax: Limit: £7.5k. Balance: £0
MBNA: Limit: £7.5k. Balance: £192 (0% purchase deal, £100 paid monthly, will be cleared in time)
Virgin: Limit: £5k. Balance: £0

I have a £2k overdraft with HSBC which I haven't used for a good 5+ years, so wouldn't mind cancelling that either.

I also have an 0% loan for private orthodontic treatment, which I pay £160 per month. Balance is currently around £2,700. I have no other debts other than my phone contract and monthly car insurance. Car was paid off last December.

Deposit will be around 10%, but I think I'm eligible for a 5% deal as a first time buyer?

TIA

ACG

Lenders vary in their stance on credit limits and balances. 
I dont think you need to be overly concerned, the chances of you having them being a problem is slim. But as a broker, I would say it would look better if you got rid of 2. £12,500-17,500 is plenty for most people. If you did run them up, its probably manageable, where as £30k you would feel a lot more. 

Brie

The bank will want to know that you are able to service all of your debt which would include pretending that any credit card is maxed out.  So by getting rid of the 2 cards you aren't using will make you a safer bet.  Reducing your overdraft should help as well.

I'd be keeping the MBNA card as they so regularly offer 0% deals and that is handy.  

Oh - and are you registered to vote?  That makes you look stable apparently.

kingstreet

I'm going to have to lean towards disagreeing with the other two here. In a perfect world you would not have so much unused credit but cancelling accounts now when you're planning a mortgage in six months or less may cause more damage than leaving well alone. Perhaps try applying for an agreement in principle now (use a soft search so avoid Virgin Money) and see if you have any issues before you get too far down a particular road...

firsttimebuyer29rp

I had about 7 credit cards, 6 with £0 on and 1 with about £2,000 on. No issues. 

amnblog

I am still waiting for my first Client to be adversely affected by having unused but active credit card accounts.

ACG

amnblog said:

I am still waiting for my first Client to be adversely affected by having unused but active credit card accounts.

Ive had underwriters tell me they were looking to decline the case because of how much available credit they had available. Although it was a small-ish building society(ie not credit score driven) and the lady could have probably bought a house on credit cards more or less.