To book trip on credit card whilst in the process of buying a house?

I’ve always used my credit card as usual when buying a house. We put the vast majority of our day to day spending on or credit card to get points and then pay it off in full each month. It’s not been a problem but we haven’t been borrowing up to our absolute limit and we always declared that we used out credit card this way (and credit card statements backed this up).

You could pay for the holiday and immediately make a payment to the card. Or just declare the amount on the mortgage application.

This can happen for several reasons. Affordability. The lender checks between approval and release of the funds and sees undisclosed debt.

The people who have had issues aren’t lying. The people who are saying they are being OTT, either weren’t close to affordability or didn’t have another check before release of the funds.

You could pay the cash onto the card first so it is in credit, and then make the payment to bring the balance back to zero.

@Notquitefinishe sorry to jump on. I've just stumbled across this thread and now I'm in a panic 😂 was it that you had the AIP but then when you applied for your mortgage offer it was declined? Or had you had the AIP, applied for and received your mortgage offer, and then they withdrew it?

AIP and mortgage offer are two different things so just looking to clarify 😊

It's a minefield isn't it. We had similar where we had an AIP with Nationwide but when it got to application stage they declined us due to a debt we had that was declared but they didn't like for some reason.

Applied with Natwest and accepted 5 days later. We've just exchanged and are completing in a couple of weeks so was just wondering what other peoples experiences are as its all so nerve wracking until the keys are in your hand!

It was 6 years ago so don't remember exact details but we had had an offer accepted on a house on the basis of the mortgage deal being in place (so an Agreement in Principle I'd imagine) and it was then withdrawn later. Some sort of check must have been done at that point. We had to quickly arrange a different mortgage (on which we actually got a better deal) so as not to lose the house. We didn't feel we had been in any way dishonest on the application - we had very much told the broker about the credit card.

Sorry not trying to poke I'm just in the middle of the process and trying to understand what lenders are looking for.

Were you declined at application then or after the offer when they did a subsequent credit check?

We had that credit card and declared it. Told the broker it was one in daily use. We didn't declare we had any debt because we paid it off in full every month. I don't even know how we would have done - the balance changed from day to day.

It's not clear from your post. Did you not declare it on your application? Or did you not have the debt at application and it was discovered from a later credit check?

I’ve never heard of not using a credit card whilst in the process of buying a house, especially if the mortgage is already approved. I’ve always done monthly spending on my credit card (several hundred per month) then paid it off in full each month, and this has never been an issue for mortgage applications.

Mine was the first reply and I just want to be clear, this was an existing credit card and was normal spending. We could prove it was paid off before the even sent us the letter about it. I'm just sharing my experience but it clearly shows it isn't always fine not and I'm not being OTT as a pp said. I was really surprised as have used credit cards for years and never once had a balance not paid off in full every month. This was of no interest to them and the mortgage offer was withdrawn.

Edit: typo

You need to do a risk analysis…

If you don’t use the CC for your holiday you stand lose a few hundred.
If you use the CC and it affects your mortgage how much would you lose?

If it were me I’d not use the credit card. I could afford to lose a few hundred but I wouldn’t be willing lose the house I wanted to buy or potentially a higher interest rate.

ETA: I’m not anti credit because a lot of times it does make sense to use credit but in this instance I wouldn’t

We were told not to, wasn't worth the risk so we waited until we had exchanged

We also put all our day to day spending on credit cards and it's never affected mortgage applications because its paid off each month.

But the answers are just a reflection of the usual MN weirdness about credit cards even when the reason for using them is sensible and nothing to do with borrowing money or debt.

OP YANBU, but BU to expect a rational answer from MN on the matter.

I think this must really depend on affordability and loan to value ratio. I’ve used my credit card just as you describe, and have never had a problem getting a mortgage. No mortgage broker has ever mentioned it being a consideration. I imagine it’s only an issue if you’re borrowing towards the max you could afford and/or the loan to value ratio is quite high.

We use our credit cards for everything (paid in full) we didn't stop when we went through the mortgage process (any of the times we have done it). We will have £1000s of pounds in our balance, doesn't even impact if you can demonstrate you can pay it.

@Trainbother to be fair, my Experian rating has gone from 950 to 995 since I stopped using the credit card. Don’t know whether it’s that or the mortgage application, but something has improved it.

If it's an existing credit card and you're just using it as a payment mechanism, to be cleared same month, it will be fine. Using cards like this actually improves your credit score.

You can pay off your credit card early. I would book it on CC for added protection and then pay it off immediately for peace of mind.

Years ago I had £2k ish on a CC due to a holiday and a few other bits I had just paid for. It was agreed I had to pay it off to get the mortgage, which I did fine, but they were quite concerned about it, given that I clearly had the money in another account to pay it.

Probably depends how close you are to the affordability thresholds - I made a joint application well within affordability this time last year and nothing was said about my credit card, then that sale fell through and I made a new solo application this year, same bank but obviously sailing much closer to the wind as only had a single income, and they were really difficult about it.

Do you have the money in savings to offset it? It’s not a huge amount of money so as long as you have it in savings it’ll be fine.

For a few hundred pounds I really wouldn’t worry. That’s surely well within what you’d normally put on a credit card in a month anyway? And if you always settle the statement in full then there really won’t be an issue. Chucking a £15k holiday to the Caribbean on a credit card the day of exchange and then paying it off over 3 months or more I can see potentially being an issue, but not something in the hundreds.

I'm really surprised at the previous replies. For my mortgage last year, I just carried on spending as normal before applying and in between applying and exchange etc. So would have been about £3k going on a credit card each month (and then being paid off)-wasn't mentioned at all.

Before they release the funds, apparently. Not sure whether that is when you sign the deed or when you exchange, probably varies, but definitely after the initial approval has gone through.