New mortgage and stoozing cards

mChavez

Hi All.

A question to mortgage gurus: I currently own my house, but family has grown over the last few years, so I need to upsize. Unfortunately, that is going to involve getting a mortgage - I'm probably looking at 45-55% LTV.

I've got about £40k in stoozing cards, 95% credit utilisation. I appreciate that general advice is to pay off all cards in full before speaking to the bank, but that's a rather expensive folly given the current savings accounts interest rates. 

Hypothetically, if I was to keep the stoozed cards, at what point will they hit me? Getting a lower DIP (this is not necessarily an issue and I can do this as many times as I want with just a soft credit check, surely)? Getting a worse rate (is that a thing for sub 55% LTV?)? 

When getting a DIP, if I declare £40k of CC, would they just count the (peanuts) minimum payments towards my committed monthly outgoings?

If I pay off the stoozing cards (fully or partially), will the effect be immediate, or do I need to do this a month before speaking to the bank?

Thank you very much.

born_again

That £40K will be counted as debt against your income. For affordability purposes.

mChavez

Thanks. Manifesting as committed monthly outgoings? But at what rate? Minimum payments (the lowest contractually payable amounts)?

born_again

mChavez said:

Thanks. Manifesting as committed monthly outgoings? But at what rate? Minimum payments (the lowest contractually payable amounts)?

Depends on lender & their internal workings.

They do not look at payments in the way your are thinking.

mChavez

Thanks. I suspected that might be the case. 

But back to my original post - I expect this will be considered at the DIP stage before a hard check, so no harm in trying?

MWT

mChavez said:

Hypothetically, if I was to keep the stoozed cards, at what point will they hit me? Getting a lower DIP (this is not necessarily an issue and I can do this as many times as I want with just a soft credit check, surely)? Getting a worse rate (is that a thing for sub 55% LTV?)? 

When getting a DIP, if I declare £40k of CC, would they just count the (peanuts) minimum payments towards my committed monthly outgoings?

If I pay off the stoozing cards (fully or partially), will the effect be immediate, or do I need to do this a month before speaking to the bank?

Talk to a broker rather than running around making multiple DIP application.

Lenders vary but I wouldn't be surprised if they assumed 3% payment per month for affordability purposes. 

Once paid off the effect is not immediate could take 30 days or more to be reflected in the credit record. 

GrumpyDil

We remortgaged about 4 months ago.

As my wife wasn't working at the time the remortgage had to be based on my income alone.  I also had 25k stoozed on credit cards. I provided evidence that I had the money to cover the credit cards in various ISA's and bank accounts and explained to my broker about the stoozing whilst offering to clear the 'debts' if needed but was able to get the mortgage agreed without any issues.

So, it is possible to get a remortgage with stoozed credit card debts but it will obviously depend on your overall position.

grumpy_codger

I had about £10K stoozed In two CCs when dealing directly with a mortgage advisor from Halifax. For the amount I wanted the condition was to pay one CC off in full before the completion. I did pay it off but am not sure if they really bothered to check this later.

eschaton

It could be a big factor. 

I tried to remortgage nearly 4 years ago. Affordability should never have been an issue in any way and LTV was only 21%. 

I had £37k on credit cards and got a straight knock back from Barclays.