Use savings to pay off debt or for deposit?

[Bellebelle]

We'll be moving house this year, we have around £40k equity in our current property, £15k credit card debt (all at 0% rate) and £10k savings. We don't have any problems making the minimum payments every month on the credit cards and could pay more but have been sweeping everything we have left at the month into a savings account rather than onto the cards. So, are we better paying down the debt to increase our chances of a better mortgage rate or adding it to our deposit to increase our loan to value ratio? We expect our next property to cost around £250k. Any advice welcome.

The debt won't make any difference to your mortgage rate, but will affect how affordable the mortgage is which will determine which lenders you could use and they do all have different rates.
Depending on your lender the rates are usually tiered depending on the deposit you put down so for example if you bought a house at 250 with a 50k deposit this would be 80% loan to value which would get a better rate than perhaps a 90% loan to value. Your advisor or broker will have a calculator to go through the different options with you when you apply. In the meantime it might be worth you asking for an agreement in principal to make sure you will be able to borrow the amount you need.

I would have thought that the credit card debt would count against you in any mortgage application as it implies that you don't have great money-management skills so I would pay that down.

We were a bit on the same position. Our financial advisor recommend us to pay off debt first and then, with the extra money left per month, start overpaying on the mortgage. Knock big chunks out. He suggested to pay the mortgage to the amount we would have to pay for our proyected mortgage (ie 250000). Currently that is what we are doing

Credit card debt will be deducted from the maximum you are able to borrow.

I think a rough guide is every £1k debt knocks between £2 and £3k off what you could borrow so your £15k debt could knock £45k off what you can borrow.

That's a pretty big chunk of your potential purchase but it all depends on your salaries and other financial commitments.