60% mortgage deposit but credit card debt

[FridayFeelingmidweek]

When divorce is finalised and we sell the house I'll have about 60% deposit for next house for me and children. On paper, this is great, but I have around 5k credit card debt that I won't be able to totally shift before. I know they also look back over 6 years of credit report (as well as 3 month bank statement) and at one point a couple of years ago I was constantly in my overdraft. Not since then though.

Anyone been in similar situation? Is it unlikely to affect my application?

Any recommendations for free mortgage advice or broker? Thanks

Are you up to date with card payments?

I don't think debt you're managing is seen as a problem and if you've got a a large deposit that will also work in your favour.

Arrears and a spotty payment history are much more likely to be a problem.

Never missed any payments no or had arrears. Thanks, that's helpful to know.

With a deposit like that and with no missed payments - as long as your income can comfortably cover your credit card debts and your mortgage payments I wouldn't expect it to cause you any issues.
Have you spoken to a broker?

They generally just subtract the debt amount from what they’re prepared to lend you. It’s very unlikely to be a big deal.

Might it better to just pay the debt off and put down a slightly lower mortgage deposit?

Once you've got more than 40/50% deposit, the rate doesn't get any better and while it's effectively putting the debt on the mortgage rather than keeping it as unsecured, the banks don't see it that way so you have to play their game no matter how illogical it seems.

@flipent no, I'm going to talk to a broker. Looks like lots of people recommend L&C.

@Bjorkdidit unfortunately I can't afford to pay off the credit card fully before applying for the mortgage, but hoping it's small enough debt compared to what I need to borrow.

Thanks everyone.

If you've got a 60% deposit, why can't you use some of that to pay off the credit card in full?

London & Country

I had a credit card, loan and overdraft. Mortgage approved with Halifax no problem on the proviso I paid my debt off when I sold my house.

It’s all about affordability. If you still meet the affordability checks for the amount you want to borrow with your debt, then it’ll be fine. If you can’t, then you’ll probably have to find a cheaper house. Have you tried an online mortgage calculator? You can input your income and outgoings such as credit card/loan debt and it will give you a pretty good indication of how much you are able to borrow.

I meant using some of the deposit money. Even if you're selling your existing property and buying the new one as a chain, you can normally commit to pay off CC debt as part of the transaction, if the lender requires it for a relatively small debt

I wouldn't recommend L&C but I work in the industry, would be the equivalent of someone who works in waterstones recommending amazon for books.

If you meet the affordability criteria then the ccdebt won't be a problem and 60% deposit is a fantastic position to be in OP.

Hi. Because I'll only get the 60% once the house sells, so it'll go straight to the new house/mortgage.

Thanks, yes, I've looked at affordability checks and that's all fine.

Thanks. Oh, I thought they were OK. Any other free mortgage broker suggestions that are good? I also saw Better.co.uk

But you can just ask to borrow £5k more than you need and keep £5k back from the sale to clear the debt....