Query re: mortgage application & credit card debt

M

Maxiechan

Registered User
Messages
7
Hi all,

I'm new here. I have a query. We want to apply for a mortgage within the next few months. We have approx €28,000 saved and are saving €1120 per month. We also have credit card debt of €6000.

My quandary is that if we pay off the credit card does that eliminate us from applying for a mortgage for 6 months as we won't have 6 months saving? Or do we continue to pay off the credit card (we can pay off €500 per month). If we have a balance of €4000 are they likely to refuse us?

If we paid off the credit card we could save €1500 per month towards a mortgage so would build up the deposit in 4 months.

Any advice welcome? The maximum amount we want to borrow is €250,000
 
Hi Maxiechan,

We were asked to get cc balance down to 5k. Looking at your figures I would pump 3k into the card and keep the 25k for the deposit. You will have extra months to save - while going through mortgage application, choosing a house, going sale agreed and drawing down the mortgage. That will allow you to save somewhere between 4 - 6k which will be your closing costs.

The repayments on the cc will affect the amount you can borrow though, so depending on your wage, it may hinder the ability to borrow 250k.

Best of luck!
 
Hi Helenl,

Thanks very much fore replying. I was just wondering if we paid €3000 off the credit card now does that mean we need 6 months of continuous savings after that,so not able to apply for a mortgage until July, or do they look at it on on a case by case basis.

Good to know that you can still be approved with some money on the credit card. It would be my intention to clear it as soon as I got a mortgage anyway.
 
Credit card debt is very expensive. It makes no sense to be saving money and not paying down this debt ASAP. Also bank will take CC payments into account when calculating your repayment capacity. While it may delay the HL for a few months I think you need to prioritise paying off the CC.
 
Hi 44Brendan,

It's on 0% rate for 6 months, although I know I won't have €6000 paid off in 6 months. In theory though, if I did have a credit card balance, would it prevent me from being approved. With the new rules, we would be approved for €252,696 (excluding deposit). Does anyone know roughly how much a credit card balance would take away from the mortgage.

Thanks in advance.
 
You can apply right away. You have been saving for some time to already have 28k put aside.

I understand what Brendan is saying re credit card debt, but I would keep the amount needed for a deposit at all costs as this is key criteria.

I know we also paid off a small personal loan (1500) (repayments were 150 per month) and that gave us an extra 25k so it does make a big impact on the amount you can borrow.

Different banks have different measures so maybe go have a chat with the mortgage rep from different banks, see what they suggest and work with what ever suits you best.

Best of luck!

Maxiechan said:
Hi Helenl,

Thanks very much fore replying. I was just wondering if we paid €3000 off the credit card now does that mean we need 6 months of continuous savings after that,so not able to apply for a mortgage until July, or do they look at it on on a case by case basis.

Good to know that you can still be approved with some money on the credit card. It would be my intention to clear it as soon as I got a mortgage anyway.
Click to expand...
 
helenl said:
You can apply right away. You have been saving for some time to already have 28k put aside.

I understand what Brendan is saying re credit card debt, but I would keep the amount needed for a deposit at all costs as this is key criteria.

I know we also paid off a small personal loan (1500) (repayments were 150 per month) and that gave us an extra 25k so it does make a big impact on the amount you can borrow.

Different banks have different measures so maybe go have a chat with the mortgage rep from different banks, see what they suggest and work with what ever suits you best.

Best of luck!
Click to expand...


Thanks very much for that advice Helen
 
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