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

[Goofusdo]

It’ll only be a few hundred pounds but I wanted to pay for it via credit card for the security. I would then pay it off in full before any interest accrues (so by the end of next month).

I don’t know enough about it, so turning to Mumsnet to ask. Is it fine to do this given we are currently buying a house or will the lender wonder why I have borrowed £350?

We have already had the mortgage application approved but in the midst of going through everything with the solicitors.

They will look at outstanding debt. Even if payment is not overdue, it is counted as outstanding. Personally, I would not use my credit card at all whilst the mortgage is being organised, just to make sure it is not going to cause a problem.

We had a mortgage offer withdrawn over £2k on a credit card which was classed as undisclosed debt, even though it was put on the CC and paid off after the application and before the withdrawal of the offer. We just saw it as normal monthly spending. We could show we had always paid it off in full for years but they weren't interested. Obviously yours is a much smaller amount but I don't know where they draw the line.

We were told not to take on any additional borrowing that was a new credit check (so no furniture on finance which apparently is a common thing people do!).

Using available credit isn't something we've been warned against (currently remortgaging) but we're not close to missing affordability. If your affordability is a bit tight, I've known friends be asked to clear credit card balances before completing.

I wouldn't. Not worth the risk.

@Notquitefinishe similar situation for us, Halifax only approved our mortgage on condition “our debt to Nationwide was paid off in full” - I just have a credit card I use for day to day spending! I always pay it off in full each month, which they could see, but apparently still not happy about it.

It would never have occurred to me that that might be an issue. They literally stipulated I couldn’t put anything on my credit card between getting the AIP and completion date. Which has been an almighty pain honestly, I’ve had to change over all my default payment cards online.

So yeah OP, I wouldn’t. Stupid as it seems.

Also - as soon as you get the house, you will find things that need to be put right expensively and immediately ….
save your pennies !

I wouldn’t, it might have no impact but I’d not want something like this to scupper anything. Think about the bigger picture.

Do they do another credit check before completion?

To add to my previous post - I cannot understand why it is not made clear to the universe that this is how it works. I was never given this information and have taken out several mortgages in the past - I found out by accident. My son recently took out a mortgage, and he stopped using his credit card completely for 4 months to ensure that there was nothing showing on there.

When I was applying for my mortgage, I used my credit card as my main means of covering all my daily expenses, and then paid it off each month. I never even thought that it would be an issue, and it wasn't. When I was speaking initially with the broker, he said it was fine as long as the balance was fully cleared each month.

That's just my experience though, and the majority of people here seem to have had a different experience, so I would be careful before proceeding.

That’s totally fine, just pay it off straight away? We took out a £10k car loan about a month before we applied for our mortgage - caused zero issues. Everyone here is being so OTT! We checked with our mortgage broker and he said it would be fine, and it was. And we both used our credit cards throughout, didn’t want to miss out on cashback and protection.

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.

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.

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.

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.

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.

Thanks all. They would lend us £60k more than we are borrowing, if that makes a difference?

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.

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.

@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.

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.

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 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.

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

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