Does credit card debt weight heavier than a personal loan for mortgage approval

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brokeagain

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Hi,

just wondering if anyone can tell me if there is a difference between having a personal loan or having debt on a credit card when applying for a mortgage?

I know it is better not to have either but I'm just curious. I have a balance on my credit card and was wondering how it would affect my mortgage application. I will have cleared it by the time I draw down the mortgage.

Thanks for your advice.
 
You could ask for your credit report from the ICB. It's possible your CC isn't on it at all. If that's the case, you could always stay quiet about the CC debt...
 
The only proble is that I pay my credit card through online banking so the mortgage provider can easily see from my bank statements that I have two credit cards as I pay into them every month.
 
My opinion is that a personal loan looks better as you are making consistent repayments and reducing the balance of the loan whereas the credit card is a revolving credit facility. It would be interesting to see if there are any bankers out there who share the same opinion.
 
brokeagain said:
Hi,

. I have a balance on my credit card and was wondering how it would affect my mortgage application. I will have cleared it by the time I draw down the mortgage.
Click to expand...

Once it will be cleared before drawdown then it should not affect your application. Clearing it may be made a condition on the loan offer that will need to be satisfied before the lender will release the mortgage cheque.
 
What about if you are applying for a debt consolidation and the credit card debt is part of the consolidation?
 
What if you have a zero interest credit card and a small loan with 8.9% interest. Would it not be better to transfer balance to 0% cc to pay off rather than pay the 8.9% on the loan. If you cut up CC and don't use it for transactions, surely it would be better th use CC to pay back ammount owed.

I am just wondering how the lenders see it when a mortgage application passes their desk.
 
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