[Closed] Credit card debt and a mortgage

[i]I'm really worried about the 6k credit card balance affecting the mortgage application.[/i]

No need to be if you're paying the balance off monthly and can afford those monthly payments.

The payments to the card will be included in your outgoings so if you can afford it then it shouldn't be an issue. As long as you haven't missed any payments.

the credit card debt will simply reduce the maximum mortgage available to you. Whats of greater importance is wether you've kept payments up on it or if you regularly go overdrawn?

Is the balance static or have/are you reducing it? Mortgage advisor should take the payments into account in your affordability calculation.

I have a personal loan and a balance on a 0%CC when our mortgage went through this summer, wasn't a problem as it was accounted for in our budget (as were the mortgage payments on MrsMomos house which we're currently refurbishing ready to rent out)

depends on the bank , but the advice i got from the mortgage adviser when i had similar - I was stoozing into another non deposit related savings account was that unless i could show otherwise it would be presumed i run up the debt saving for the deposit....

I was advised to pay it back from the other account and have a clean slate as i would have my pick of mortgages then rather than be limited to the not so picky ones.

Go see a decent mortgage adviser and they will look at what you can and cant have with your current balances/incomings/outgoings without putting black marks on your record with refusal.

It's in 0% and I don't have a card for it so is unused. Was solely set up to pay off the debt on interest free.

My wage is £1400 and I have £450 outgoings.

No late payments or missed.

As first time buyers it is totally new to us.

We are looking at going with HSBC as they have some of the best rates and we've banked with them for 18 years.

When you say mortgage advisor is that separate to the bank? As in through a solicitor?

Would there be a fee involved?

"We are looking at going with HSBC as they have some of the best rates"

i presume you are being made to use countrywide conveyancing also ..... i would look into that before you proceed if they still are doing that.

Not always a fee.

but ill be honest - i was trying to get a mortgage right in the middle of the banking colapse so things were as strict as they have ever been - stuff has been relaxed big time of late even with the new rules.

Went through similar last year. I have £2k on cards and as long as I could show that they were being paid back it wasn't a problem. I should imagine our deposit and final sale value would be lower than yours so should all be in proportion.

The only reason we are looking at HSBC is that when I run credit marcher through experian using my credit file it comes up as a top match.

Our credit ratings are 999 and excellent on equifax so the credit card debt is the only worry.

We just really want our own house. Once the mortgage is in place I would aggressively pay the credit card off.

make an appointment with an HSBC mortgage advisor, in my experience they are absurdly strict. They offered less than half of our requirements on their headline rates that drew us in.

After trailing round a few banks we finally had a sensible deal from Town and Country Mortgages.

[url= http://www.tandcmortgages.co.uk/mortgages.html ]Here.[/url]

The house we are looking at is around £130k so our deposit would leave a loan of 115.000k

I am in the process of selling bits and bobs and have 1k to knock off the debt. Should I do that now or nearer the time in November?

Oh should add, we used London & Country to find us a mortgage. Very helpful and costs nowt.

Mosey - the bank will have someone who consults with you on their offers (so a mortgage adviser) they will do some simple numbers with you to check you can afford the repayments. Mine suggested I could and also suggested I look for a more expensive house (i.e. borrowing £100k more than we were looking to) - with a wink to my wife saying "it's ok love you can talk him up later" - I could have ****ted the guy! So they are sales people and you should take what they say with a pinch of salt.

There is also the option of an Independent Financial Adviser who can check across the market for other offers for you. There shouldn't be a cost with this as they work on commission for the mortgage they sell, although these guys struggled to match the offer we got direct from Santander at the time (5 years ago now).

Moneysavingexperts guide to mortgages is really worth a read before you commit to anything!

cheap rates attracted many of my friends to HSBC - it seemed to be like kicking a hornets nest (as first time buyers - seemed to be ok at remortgages)

couple of sales fell through - others they wouldnt lend nearly the full amount (of their own valuation not some pie in sky number) -heels dragged/ lost paperwork etc etc.

i would look into it a bit further than just the rates if i was you. - it seemed like a sure fire way to raise your Blood pressure.

we had a hard enough time with RBS who were supposed to be ok for these things.

caveat.
IANAMA

My wage is £1400 and I have £450 outgoings.

If you're earning £5600/month I can't see HSBC being particular concerned about your CC debt for a £115k mortgage.

"If you're earning £5600/month I can't see HSBC being particular concerned about your CC debt for a £115k mortgage."

EH ?

I don't think he means per week Flaperon, can't understand why you would think that either.

Yeah original post is "We are first time buyers, have a joint income of 40k"

As first time buyers our mortgage was through HSBC. I can't remember why we went through them exactly, but we did. The mortgage process itself was ok, but steel yourself for doing the mortgage application on-line, then having to spend an hour on the phone going over it all again.

However. I have posted on here before about Countrywide and their conveyancing. With no chain at all in the sale, we had an offer accepted in April, but didn't move in until mid-September thanks to their complete and utter incompetance.

I'm assuming that's monthly, not weekly... (edit: as observed by half a dozen people with quicker fingers than me!)

Still makes £450 outgoings seem really low, but if you're buying a house for £130k I'm guessing you're not in the South East!

When we applied 18 months ago (5% deposit, £250k house, I had about £8k on CCs) they just wanted me to have cleared a bit off by the time the mortgage was approved (down to £4k IIRC), which was easily done. They did however get quite funny about the affordability stuff that they all have to do now. Monthly breakdowns of what you spend on birthday presents and haircuts and shit like that. We probably over estimated a bit, which nearly came back to bite us! They asked about 25 categories, so saying "ohhh, just call it £20/month" ends up adding up massively on your monthly outgoings!

There were also some catch-22 things - one of the affordability criteria was "credit card payments", I argued that I just paid off whatever I had left at the end of the month, which was far more than the minimum, but I couldn't really say I paid of £x per month. If they took the average I'd paid off for the last few months it would show I couldn't afford the mortgage etc.

All approved in the end though.

Flaperon - Member

[i]My wage is £1400 and I have £450 outgoings.[/i]

If you're earning £5600/month I can't see HSBC being particular concerned about your CC debt for a £115k mortgage.

That's PCM not PW. Either way, £6k of credit card debt will reduce your ability to repay by only £150PM.

Your totals are about right - 2.5* multiple, limited debt, no kids?

We were told by a reliable source that HSBC are the strictest/tightest folk out there when it comes to getting a mortgage and how much they'll lend for a given income/deposit. Good luck though. If they're no good for you, others probably will be.

Yeah, at the minute the only outgoings I have is £275 rent, the credit card and Virgin tv/mobile.

We are up north. Cheshire to be exact.

No children in the foreseeable.

We were told by a reliable source that HSBC are the strictest/tightest folk out there when it comes to getting a mortgage and how much they'll lend for a given income/deposit.

I wouldn't see that as a negative - I think people should be forced to think very carefully about their repayments and the impact of interest rate rises - not that they seem to have happened over the last X years, but they might and you should have to work out how you afford things when that rate has changed.

The rent won't be taken into account as an outgoing.

Yeah, at the minute the only outgoings I have is £275 rent, the credit card and Virgin tv/mobile.

We are up north. Cheshire to be exact.

No children in the foreseeable.

What about council tax? Other utilities? Food? Petrol/tax/car insurance/servicing? Public transport costs? Socialising? Mobile phone contract? Hobbies (careful with that!)? Holidays? Christmas? Eating out?

They asked us about all of that, in detail. You basically have to account for every pound you earn!

The rent won't be taken into account as an outgoing

It was for us, but only from the point of view of the monthly budget as above. I guess proving you can pay rent roughly equivalent to a mortgage payment is favourable when compared to someone living at home who has no regular outgoing for lodgings.

HSBC are the strictest/tightest folk

I don';t know about this topic (I need to learn soon as im getting ready to buy...) but surely that's not strictly a bad thing?

Aren't they looking out for you, making sure you can afford the repayments?

Otherwise it'll end up like Wonga, with people with spiralling debt.

Aren't they looking out for you, making sure you can afford the repayments?

Yes, in effect, but they're not doing it for your good, it's so they don't lose out on income! At the end of the day they exist to make money from you!

Njee the above was just my outgoings on my wage.

Joint we have around 2500 a month with £575 rent £104 council tax, £100 motoring, £60 insurance (both cars total) and £17 house insurance.

Mobiles we have £60 total and £120 food.

That leaves us with around £1000 a month (rent included).

The rent is more than the monthly mortgage cost.

The rent won't be taken into account as an outgoing

It was for us, but only from the point of view of the monthly budget as above. I guess proving you can pay rent roughly equivalent to a mortgage payment is favourable when compared to someone living at home who has no regular outgoing for lodgings.

I mean in terms of 'can they afford this mortgage on top of their other outgoings', but I guess there are different ways of looking at the same thing!

MoseyMTB - Member
Yeah, at the minute the only outgoings I have is £275 rent, the credit card and Virgin tv/mobile.

We are up north. Cheshire to be exact.

No children in the foreseeable.

They will take [b][i][u]EVERYTHING[/u][/i][/b] into account when they assess your ability to repay. That includes; food, water, gas electric, council tax, student loan, repeated spending (if you go out every week, if you have your haircut every month) before allowing you to borrow.

Joint we have around 2500 a month with £575 rent £104 council tax, £100 motoring, £60 insurance (both cars total) and £17 house insurance.

Mobiles we have £60 total and £120 food.

That leaves us with around £1000 a month (rent included).

£120 a month on food!? Wow! We're more than double that 😳

As I say though, and not trying to be awkward, expect to be grilled for a lot more than that, because that really isn't all of your outgoings. All of the things I mentioned we had to give a monthly expenditure. I assume you buy each other birthday presents (plus family), and do Christmas? Tobacco & alcohol were included as well come to think of it. I assume you own a bike? Monthly cost associated with that...?

Ok well at least I know now.

1 benefit of being bald is I don't have hair cuts lol.

Out outgoing bar essentials are non existent. Having moved to Stockport, where none of my friends live, we literally just work and do stuff together.

I have a feeling we will get a no at this point.

Drop me a line if you want a cracking financial advisor. He sorted mine out fee free, I just called him, said I didn't want to pay him a fee but the mortgage had £600 attached to it for him. He did enough to get it through but none of these other stupid questions, totally unsigned to anyone too. Find the product you want on money supermarket etc, do your own sums and run it past him.

Also, countrywide, avoid, shower of sh1t. You would be better doing it yourself!

I think you'll struggle if you take the "we really don't spend any money on anything else" tack, but as I said, it's very easy to almost over commit your monthly outgoings without realising.

If nothing else, why have you got anything on CC if you've got £550 a month left over? That's £6600 a year that you're not spending, on anything.

No bike at the minute, sold all bits and bikes to pay off some of this debt 🙁

The wife can't drink so we don't drink.

We will just have to be honest.

I really appreciate all the advice.

Njee, I mean more as a whole, we will write everything out tonight.

We don't hve children, or car hire/lease etc I was thinking more of those things.

See, like I say, that doesn't stack up. Why are you selling things to settle debt when you have all this money you don't spend?

They'll want to understand that.

We're crossing posts now, but you get what I mean!

Edit: one last point, they didn't care about your/my outgoings/income, it was all combined, assuming you're getting a joint mortgage. Don't overcomplicate with all this "well I only have these outgoings, but [b]we [/b]have all of these..."

More it would probably help if I explained things.

I recently did a PGCE and became a teacher. So all this money left is over the last three months.

Interesting seeing people being asked about details of outgoings - I didn't get any of that (earlier in the year).

Did need to provide 3 months of bank statements, but that was to show my salary going into them.

This was woolwich/barclays and they did note I was basically a perfect customer, no debts other than my student loan, two incomes (me & partner) and reasonable deposit. It all seemed a lot more straightforward than I thought it might be.

Interesting! Whilst Nationwide weren't bothered about seeing any bank statements (we did bank with them, so I guess they had the info), they did it all on the affordability criteria stuff.

Once the mortgage is in place I would aggressively pay the credit card off.

Ha! Never bought a house before have you?! 😆

Couple of years ago now for our remortgage (and bearing in mind it was for 50% of value of house) we got sat down for a good hour or two going through everything on our bank statements, literally down to how much we spend on a Firday night (err, nothing mate, got kids...).

IA - Member
Interesting seeing people being asked about details of outgoings - I didn't get any of that (earlier in the year).

The criteria for mortgages changed in April with lenders taking it up at varying speeds over the next 3 months to July.

Dr D and myself got refused by HSBC in July despite having had an agreement in principal in Feb14 for a higher amount than we eventually tried to borrow.

Interesting seeing people being asked about details of outgoings - I didn't get any of that (earlier in the year).

The MMR rules came in to play in May. I'm about to complete and didn't need to answer any outgoing questions as I went through a broker and the monthly spending was all on the bank statements.

To the OP a lot will depend on your LTV under 25% and I doubt you will get what you ask for.
I banked with HSBC for 20 years and had 60k sitting in my account, perfect credit score and mortgage payments would have been 1/6 of income and they wouldn't lend me bobbins.
I would go with a broker and not your bank as they have the whole of the market to chose from.

EDIT: like the post above I too had an AIP 8 months earlier, the spotty graduate in the branch said 'that was then this is now' when I queried why they wouldn't offer me anything sensible. I withdrew all my money the following week, why should they lend my money out to other people and not me?

You don't have to use countrywide for conveyancing with HSBC, you can now choose a solicitor to act for you & HSBC if they are CQS accredited (see [url= http://www.hsbc.co.uk/1/2/mortgages/conveyancing-options/cqs-accredited-solicitor-firm ]here[/url]). Check this before you appoint a solicitor as it causes a bit of a nightmare otherwise.

And I'll echo the sentiment about being prepared to do everything online & then spend an hour on the phone sorting it out (this is for a new house purchase). We remortgaged with them just over a year ago without too much hassle.

MrSmith - Member

[i]Interesting seeing people being asked about details of outgoings - I didn't get any of that (earlier in the year).[/i]

The MMR rules came in to play in May. I'm about to complete and didn't need to answer any outgoing questions as I went through a broker and the monthly spending was all on the bank statements.

To the OP a lot will depend on your LTV under 25% and I doubt you will get what you ask for.
I banked with HSBC for 20 years and had 60k sitting in my account, perfect credit score and mortgage payments would have been 1/6 of income and they wouldn't lend me bobbins.
I would go with a broker and not your bank as they have the whole of the market to chose from.

EDIT: like the post above I too had an AIP 8 months earlier, the spotty graduate in the branch said 'that was then this is now' when I queried why they wouldn't offer me anything sensible. I withdrew all my money the following week, why should they lend my money out to other people and not me?

I've begun doing exactly this. I've banked with HSBC (formerly Midland) since I was 12 years old and am in the process of moving my money elsewhere following their less than helpful approach.

£120 a month on food!? Wow! We're more than double that

That's around our weekly food expenditure (2 adults, one food-refusing 4 year old).... 😳 😳

We want to borrow more to finance an extension to our house. This tells me we could do with going through our finances in the same way.... #spendthrift

The criteria for mortgages changed in April with lenders taking it up at varying speeds over the next 3 months to July.

The application process etc was all after the new legislation took affect, we were one of the first people to go through it at Barclays.

The advisor explained he had to make a (justified) judgement as to affordability, that didn't necessarily mean going through everything with us. We had budgeted in great detail in advance though, even although he didn't want to/need to see it, we did offer to show him spreadsheets accounting all bills over the previous 8 years... I don't budget as such, just spend money, but I do keep track of it all.

May be he just decided since we'd thought it all through, had good answers prepared for all the questions that was enough for him?

I honestly do not think anyone here can help decide if HSBC will give you a mortgage. In fact this stands for any provider.

The only thing you can do is apply and IF you get refused ask why the underwritter turned it down.

You have to choose the product you want first though, as repeated credit applications will eventually lead to you being declined.

£6k debt on £40k income is quite a lot! I would genuinely be worried about paying that off and having a mortgage, regardless of whether you actually can get a mortgage or not.

Again regardless of what the lender thinks, have you added 1-2% on top of the quoted rate to see if you can still afford any potential increase?

Anyone got a link to some of the example questions? I'd be quite keen to start working through the detail in advance - might help Dr North focus on whether than new handbag* really qualifies as an "essential item".

Joking aside, I'd be keen to be prepared. I'm not as diligent as IA - I just read bank and credit card statements to check for any impropriety and then pay my bills on time. Other than saving, there isn't a huge amount of budgeting in our house.

*Other sexist prejudices are available.

See 6k debt 0% didn't worry me before the mortgage as I set aside £200 each month to pay it off leaving me £800 in my account.

It's only now with the mortgage applications I'm worried.

When I get my pay rise in Feruary if be able to afford double that and pay it off sooner. The problem is age, I don't want to leave owning a house much longer.

Funky the mortgage payment would be less than rent and that is easily affordable at the minute.

It's that "at the minute" which is a concern though, interests rate can only go one way, and if you believe some of the commentators out there, they're going to go up very soon.

I'd phone a mortgage broker and ask them. In the time it's taken for this thread to have unwound you'll have a professional answer.

Who do I ring?

Any recommendations in the north west?

see my earlier post, I dealt with Will 2 years ago, no idea if he's still there but he was professional and sorted a better deal than I was offered on the high street.

I've begun doing exactly this. I've banked with HSBC (formerly Midland) since I was 12 years old and am in the process of moving my money elsewhere following their less than helpful approach.

I'd recommend 1st Direct as one of the less useless ones. Bordering on the competent and approachable.

I'd recommend 1st Direct as one of the less useless ones. Bordering on the competent and approachable.

Funny, I had exactly the opposite experience with First Direct and the only way to get my mortgage application moving was to call every day and stay on hold for about 20 minutes each time while they worked out who I was. I wont be using them when our current deal ends.

OP: I'd get yourself over to the MoneySavingExpert forums. 🙂

I had exactly the opposite experience with First Direct and the only way to get my mortgage application moving was to call every day and stay on hold for about 20 minutes each time while they worked out who I was.

i thought thats how you get a mortgage.....seems to be ime.

i thought thats how you get a mortgage.....seems to be ime.

I found both RBS and Barclays to be good to deal with FWIW. In terms of being able to make an appointment and go speak to a human being that knew what they were talking about.

Not sure about other banks, may be better in person than the phone?

mines was RBS

i only got it moving after weeks of nothing in the end after online/phone told me i had to go to the bank to sort stuff out - the bank told me i had to go to online/phone to sort it out - while i was standing outside the bank.

i said hold on the line- walked back in asked to speak to the manager , and just put the phone on speaker phone on his desk and asked them to speak to each other as clearly they didnt communicate any other way/time.

mortgage was approved that day in the end.

Well in a bizarre twist we just got back from our grand parents, the wife's not mine, who have given us a cheque that changes this thread.

It's the weirdest thing.

Thank you everyone, we will be ringing the bank and making an appointment to find out what they think.

Much good. Best of luck.

Thanks for all the advice trail - rat.

I know we need to speak to a broker/adviser but this place has such a vast selection of people it's always worth an ask.

6k of debt at 0% while you have 15k invested earning interest sounds like excellent money management to me.

Do you do mortgages edukator . Makes perfect sense in my mind but mortgage people tend to have a different mindset.

I did borrow part of the money to buy a flat once. I had the cash to buy it outright but borrowed as the rate was lower than I was getting on other investments - with the same bank. But no, by the time I was credit worthy as a self-employed immigrant I had enough money to buy our house.

I was looking towards you for a loan more than saying do you have a mortgage 🙂