Question about application and CC debt

newmortgagenewme

Hello, I have a question regarding getting my finances ready for a potential mortgage application in the near future, 6-12 months from now. I’ve also posted This in the CC forum  

I am in full-time employment and over the last few years have also operated a small weekend business online as a sole trader. Over those years I used a number of Personal credit cards exclusively for the business in order to improve my cash flow, buy stock, cover expenses, and take advantage of a number of 0% percent balance transfers with a view that after factoring in the transfer fees the business cash holdings would earn an interest in excess of the fees. This has all been bookkept properly and I do the full self assessment every year and do not hit the VAT thresholds. 

I have excellent credit with no history of missed payments and no other debts other than current outstanding mortgage.

The CC debt equates to about 80% of my yearly full-time wage and the sole trader business holds in excess of this amount in cash. 

Overall, across the various different credit cards, there is approximately 3X my full-time wage in available credit limits, which as I understand means that from a lenders’ standpoint I have high exposure. 

As of this year, I’m no longer operating as a sole trader as the market has changed and is not as profitable as it was a few years ago, so my only source of income will be my full-time job, and a bit of savings interest.

Would I’d like to understand from those who have underwriting experience is what would be the best course of action for me in advance of my mortgage?  I’ve come to the following conclusions:

1. Close 70% of my credit cards to reduce exposure. 
2. Pay off all cc debts

Is there any advantage to doing that now as opposed to closer to the time of the mortgage application? I have no issue with doing this, but it would mean that I would lose out on some additional interest as many of the cards still have over 10 months of 0% percent rate on them.

Is it better to show a sharp payoff and closure or steady servicing of the debt?

eschaton

The credit cards could be an issue with a mortgage. 

3.5 years ago I had £33k on cards. Perfect repayment history. 

I tried to get a 7 year fix at 2.24% with Barclays with a 21% LTV and got knocked back. No risk. 

By the time I’d repaid all cards as they expired, rates had shot up so remortgaging was less attractive. 

newmortgagenewme

eschaton said:

The credit cards could be an issue with a mortgage. 

3.5 years ago I had £33k on cards. Perfect repayment history. 

I tried to get a 7 year fix at 2.24% with Barclays with a 21% LTV and got knocked back. No risk. 

By the time I’d repaid all cards as they expired, rates had shot up so remortgaging was less attractive. 

Thank you, did you have the balance at the time of application?

eschaton

newmortgagenewme said:

eschaton said:

The credit cards could be an issue with a mortgage. 

3.5 years ago I had £33k on cards. Perfect repayment history. 

I tried to get a 7 year fix at 2.24% with Barclays with a 21% LTV and got knocked back. No risk. 

By the time I’d repaid all cards as they expired, rates had shot up so remortgaging was less attractive. 

Thank you, did you have the balance at the time of application?

Yes. I had approx £33k on the cards and £46k on the mortgage. The CC’s could be the only issue. If I’d got past the first stage I would have repaid all the cards if required.