The size of your credit card debt won’t be high on your list of concerns when you begin to plan to buy your first property.
But while it can have a fundamental impact on the size of a mortgage you’ll be offered.
You’ll have to declare to a lender all your outgoings and debts. The more you’ve extended yourself with your plastic, the less fantastic the news will be.
Before applying for a loan, you should try to pay off all your debts, such as loans for a car or holiday. The fewer outgoings you have, the more you’ll likely receive as a mortgage.
As an experienced mortgage broker, I work with many clients who’ve worked hard to get their credit card debt down.
If you’re worried about how your credit card debt might affect your ambitions to own your own home, here are six tips to help you pay it off.
Focus on one card at a time: Select the card you use most to boost your credit rating. If you use more than 20% of the balance, your rating will have taken a hit. Getting this under control will be a big win.
Stop wasting money on interest: Select the card with the highest interest rate if that’s your biggest problem.
Make a phone call: There’s no harm in asking your card issuer for a lower interest rate. If you’re a good customer who pays on time, they’ll want to keep your business. Even if you get a point or two taken off, that’ll save you several hundred dollars over a year.
Double your money: Credit card interest is usually calculated daily, so try to make two minimum payments a month. Your debt shrinks quickly if you do that.
Moving debt around: It’s tempting to find a card with a super-low introductory rate and transfer all your debt to it. Only do this if you’re prepared to blitz your debt before the low-rate offer expires. Otherwise, you could find yourself with an even bigger headache.
Find a cheaper loan: It’s worth investigating taking a loan with lower interest and paying off all your cards in one hit. If you’re employed with a good credit rating, this is doable.
If you’re now seriously considering a home loan, please do not hesitate to call me. Together we’ll find the most suitable home loan for your situation and discuss in-depth how to handle any troublesome debt. Before you know it, you can be a homeowner!