Credit card debt worries

entwistle18

Hi

My mortgage is up for renewal in Aug 08. I am worried about how the credit crunch will affect my remortgage.

I currently owe £10,000 in credit card debt but have £7,000 in savings.

My question is do i use my savings to pay off most of the debt before remortgaging or do i keep the debt and savings as they are and remortgage?

Any advise/ideas?

MAny thanks

_Andy_

Hi

It's hard to say how/if it would affect you without knowing your income and mortgage amount. Most lenders would take 3% of your balance of the cards as an outgoing, i.e. they'd assess the affordability of the proposed mortgage.

Therefore, depending on the size of your income etc, it could affect you, it could not.

Personally I'd suggest, regardless of your mortgage, cutting back that debt as much as you can using the savings.

Cheers

gillian46

you need to work out if you can get a better rate for your savings than the interest on your credit card (I think this is almost impossible). Martin has done an article on the pro's and con's of this decision. Will you be able to pay off the other £3000 before the mortgage is renewed in August. It might not be as bad as you think in August with the market place.

entwistle18

Mortgage for £130,000 over 23 years property worth £150,000
joint income of 46000
looking for 5yr/10yr fixed

poppy10_2

It is almost always better to pay of credit card debt than to have savings - interest rates of credit cards are sky-high.

herbiesjp

Your income is more than enough to cover the mortgage and the credit card - so you do not have to pay off the card if you do not want to, in order to get a new mortgage

In terms of money saving, it might not be a bad idea, however you should always have an emergency fund of money to cover unforeseen circumstances

What you might want to do is use some of the savings to reduce the mortgage to 85%, as that may open up a few more rates for you with some lenders