Moving mortgage in January, will my stooze pot affect anything

youreds

Hi all, I currently have around 14.5k stoozed in my Standard Life bank offset mortgage from a Virgin & an MBNA. My discount period ends in January & I will be shifting to a normal mortgage & using savings accounts instead, after reading this thread I found out that offsets aren't that good, although this one has been ok with the 2 year discount.
I've just applied for an RBS card & will be muling whatever credit limit I get via my Virgin card into the offset.
When I come to remortgage I could potentially have over £20k credit card "debt" on my file.
Would it be prudent for me to clear down all the cards a month or so before moving mortgage, or should I not worry.
I have nothing on my credit file re: late payments etc. & the RBS is the only application I've done in a while. I'll probably be looking for £85k on the mortgage.

Cheers

Youreds!

Reaper

You will hear conflicting advice on this because different lenders have different policies. Some people have reported lenders include it in their calculations when deciding whether to lend (and therefore they might reject you), some have had the lender saying that they will lend but the credit cards must all be paid off first, and some have been happy to ignore it when shown proof of savings enough to cover it.

If you were a first time buyer I'd recommend stopping stoozing until it had gone through as it is hard enough to get a big enough mortgage without also cutting down on the number of lenders to those willing to overlook stoozing.

However in your case it is not quite so important. I think I'd scale it back a bit, e.g. not take out new cards when your current deals expire. Meanwhile as soon as you have an idea which company you might remortgage with I suggest you ask them if credit card debt will affect their decision. Make sure you tell them you can show proof of savings enough to cover the debt.

louise1234_2

I think they take 'debt' off the amount they are prepared to lend, eg.

3 (or another multiple) x salary - debt = amount of mortgage you can get.

I'd say it all depends on your income, how much mortgage you need & value of house. If your income is large enough, I don't think you'd have any issues, but if it is tighter, depends on lender.

youreds

louise1234 wrote:

I'd say it all depends on your income, how much mortgage you need & value of house. If your income is large enough, I don't think you'd have any issues, but if it is tighter, depends on lender.

I'll be on around £26k at remortgage time, partner is on £13k, but has just started her maternity leave (Sleepless nights just a few weeks away :eek: ), & will still be on it then.

House is worth around £170k, mortgage required £85k repayment over 23 years, total savings will be around £40k, of which £20kish will be stooze (depends what RBS give me). I think I'll err on the side of caution & clear down MBNA & Virgin (yes I got both together!), which expire in feb. I'll probably give my mortgage man a ring & see what he thinks too.

Youreds!

schmooser

I would recommend speaking to potential mortgage lenders about this. i.e. do your research on which lenders have the products / rates you want and then speak to a person directly about it rather than going through any of their online automated offerings.

I confirm what Reaper said, policies vary, although nearly all of the mortgages companies I spoke to were happy to lend me the cash I needed if I either paid of the credit cards in full (which ofcourse stoozers can do at any time), or were happy with the statement from my INGDirect account which has a conveniently named account "Credit Card Pot" to demonstrate that I could cover the debt that was registered when they did their credit report.

The problem can be that they work out how much they would lend you based on your salary then reduce this by the amount of debt you already have, in my case this meant that sometimes the online calculations would come back with a lower amount than I need to borrow. And obviously it's difficult to talk about specific circumstances with a web page!

After much research, I decided to apply in person at Nationwide taking in my ING statement as evidence, they got me to sign a letter basically saying I would pay off the debts within a month of completion, i.e. there was no requirement for me to do anything before completion. The guy then actually said that it was then clearly my own choice (and risk) as to whether I actually did it or not. The only time it would be an issue is incase you defaulted on a payment for any reason and they then investigated and found out you hadn't done it then you would be in breach of their terms & conditions and could have a world of trouble!

But for disciplined stoozers who have the funds on hand at any time there is very low risk. In fact of course if you wanted to you could pay the original 25K (in my case) off and then load all the cards up again straightaway. Still therefore having the same "debt" but actually satisfying the terms of the mortgage condition, because now you've got a debt of a different 25K not the one you had when you took the mortgage out! Of course you may incur some charges doing this which hurts for any stoozer, but at least you've covered your back!