mortgage advice

[newhomeowner]

Hi all ,
We have a agreement in princible from halifax when we applied we said we will clear off credit cards before mortgage application(we were not wxpecting to find a house this soon) . I have a balance of £1900 on a 0% credit card for 40 months
I could pay it off but i am keen to keep as much cash as possible since we will want to change some staff at the house once we get it
Do you think it matters ? I dont think ita a big amount i currently pay 50 pounds a month for it and i dont use the credit card is just a balance transfer that i have done on a big purchase .
Keen to know if you think this should affect our application

[AddictedtoGreys]

We applied for a mortgage a year ago with Halifax and one of the points was we had to clear our debt owed on our car before application. We did clear it and they did check if we had When we applied.

[newhomeowner]

Thanks for your reply . If you dont mind me asking was it a big debt ? I am just wondering if this small amount has any effect .

[JT05]

Why don't you pay it off and then borrow for the stuff you want to do on the house after you've got the mortgage?

[newhomeowner]

Cause i will need to pay the contractors for staff and i am assuming they dont take credit cards . So you all think it matters then ? I guess i can ask tomorrow wt the appoitment

[bearbehind]

No one can say exactly how it will affect you as It depends how tight you are on affordability and your overall circumstances.

I think the general rule of thumb is that you can borrow £3k less for every £1k debt you have so you will potentially be able to borrow nearly £6k less than you would if you cleared the card.

If you are already looking to borrow at the top end of what you potentially could then it might be a problem.

[newhomeowner]

We are borrowing 12 k less than our maximum thank you for that calculation am assuming it should be fine then

[HandbagFan]

You may find that it's a condition On your offer from Halifax that the card has a zero balance before they'll release funds - and your solicitor will be legally bound to confirm this before they can draw down funds for completion, meaning they need to see evidence from you that satisfies them (eg a statement with a zero balance).

On the other hand you may find there's no mention and they're happy to make the formal offer without mentioning the credit card balance.

[newhomeowner]

Thank you for the reply . I though they would want us to clear the funds before the appoitment for the full mortgage tomorrow . If its until the funds are realease then that should be ok

[bearbehind]

You'll find out for sure tomorrow if you have an appointment but, if I were you, I would go prepared to settle the card in full.

£12k really isn't a lot to play with.

From what I've gathered, Halifax don't hard search at DIP stage so often give a higher initial DIP than they are actually willing to lend on full application.

If you only have £12k leeway from the absolute max based on no debt then you may well have to pay it off in order to secure the mortgage you need.

[AddictedtoGreys]

No wasn't a big debt, was quite a bit to us though, just under £1k

[homedreamer]

Just an update mortgage was approve without clearing the debt in fact she didnt even ask about it which was weird

[bearbehind]

Are you sure it has been fully approved- unless you've had the survey etc and have the formal offer then it's still just in the application process.

I'm not saying it won't be fully approved, only that it's unlikely to be so at this stage.

[homedreamer]

We asked her if that means we are approved and she said yes i have no concerns . Well anw i think it will be fine