Can I Remortgage With Credit Card Debt?

 

One of the most frequently asked questions we get here at BR Needham is “can I remortgage with credit card debt?”. 

It’s entirely natural to worry about this, as lenders will always review your entire financial history before making their decision and it’s not always possible to clear your current debt levels before you apply for financial products.

If you’re concerned, the good news is that yes, it is indeed entirely possible to remortgage if you do have credit card debt, but it will depend on the lender, as well as your current income and affordability, with providers looking at your credit card monthly repayments when assessing your level of risk. 

Affordability

Assuming that you don’t have any missed or late payments on your credit cards, your biggest worry when applying for a remortgage will be affordability. Generally speaking, the more you’ve borrowed on your credit card, the lower your maximum mortgage borrowing will be.

It’s difficult to say just how much credit card debt is too much, as it will depend on your circumstances and what your debt to income ratio is.

If you have £5,000 on your credit card, for example, but will be able to pay this off quickly because you’re due a pay rise, a bonus or have plans to sell something (like your car), lenders will potentially be more inclined to view you as a viable remortgage applicant.

However, the amount of time that you’ve held the credit card debt for can work against you, particularly if there’s no evidence that you’re able to reduce it in the near future. Lenders can potentially view this as a sign of poor financial management, which can make you look like a riskier investment in their eyes.

Maxing out your credit card can also have an impact on whether you’ll find favour with lenders. Even if you’ve never missed a credit card payment, having high debt levels on credit cards can suggest that you’re reliant on this as a service. In this instance, you can expect to face a greater level of scrutiny from lenders.

What to do if your remortgage application is declined

It’s possible that your initial application with one lender will be declined. It’s important not to panic at this point, as it doesn’t necessarily mean that every lender will make the same decision. 

Every provider has their own assessment criteria, but the BR Needham team can help you find the most appropriate deals for you to increase your chances of being approved.

If your application is refused, we can investigate the reasons for this, looking at your credit report and history, your bank statements, pay slips and so on, to help us make a new mortgage recommendation with a more suitable lender.

If you’d like to find out more about how we can help you secure the financial products you need, even with high credit card debt levels, get in touch with the team today.