Is it better to pay off 0% debt before applying for mortgage
Is it better to pay off 0% debt before applying for mortgage
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Sonofabeesting

Original Poster:

599 posts

213 months

Monday 28th April 2014
quotequote all
Hi

I am hoping to either sell my house in the coming months or at least to remortgage (fix coming to end on 1st August).

I currently have a couple of 0% deals due to be completely paid off in the next 10 months which represent about 20% of my monthly income. I have the money in my saving account to pay these off now if I need to.

With the new rules coming in now, would we be in a better position to pay everything off? Including paying my current mortgage (which is not on a very good rate at the moment)I have about 40% free each month after all bills etc paid. Or would they not look at these as they will be paid off within the next year?

Thanks

Sarnie

8,375 posts

239 months

Monday 28th April 2014
quotequote all
It's impossible to say without knowing all of the details....

They will however take the balances in to account at application stage, if they are still present irrespective of when you state they will be paid by. How much impact it has on you is determined by your income, LTV, mortgage balance, outgoings and credit score.

kmpowell

3,549 posts

258 months

Monday 28th April 2014
quotequote all
Bear in mind it takes circa 3mths for any debt to disappear off your credit file. So if you're applying for a mortgage in the next few months you'll have to declare the debt. The rate of APR being charged in the debt is irrelevant.

I know all this because I was asked the same questions today when going through my mortgage application with my intermediary.




Sarnie

8,375 posts

239 months

Monday 28th April 2014
quotequote all
kmpowell said:
Bear in mind it takes circa 3mths for any debt to disappear off your credit file. So if you're applying for a mortgage in the next few months you'll have to declare the debt. The rate of APR being charged in the debt is irrelevant.

I know all this because I was asked the same questions today when going through my mortgage application with my intermediary.
But if you can provide a copy statement showing the card being cleared, that will suffice.

.:ian:.

3,166 posts

233 months

Monday 28th April 2014
quotequote all
Playing around with some mortgage calculators, most seem to reduce the figure they will lend by £5k per £1k of CC debt!