Impact of credit card application on future mortgage application

Discussion in 'Loans & Mortgage Brokers' started by RedRoom, 26th Jan, 2019.

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  1. RedRoom

    RedRoom New Member

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    Hi. We're looking at buying our first PPOR in about 7 months' time. My husband has some credit card debt and is considering rolling this onto a 0% card now and cancelling his existing card. The new card will be paid off over the next 5 months. He only has the 1 credit card. I have 1 credit card in my name which is paid off each month.

    Will a new credit card application now affect the chances of getting a mortgage in 7 months' time? We'd be cancelling the other 2 cards.

    We've checked both of our credit histories and they only show these 2 cards and our mobile phone accounts, all payments up to date and no late payments. We could keep the existing card and continue to pay it down, but would prefer 0% interest while we do so, as long as we'd still have a good chance of being approved for a mortgage later this year. Any advice? Thanks.
     
  2. Phantom

    Phantom Well-Known Member

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    A new credit card application alone shouldn't negatively impact a home loan application in the future. It only becomes an issue if you are doing this often or making and creating multiple hits on your credit file each time.

    On a side note in regards to serviceability, lenders will take into account your credit card limit not the actual balance when assessing your expenses when you apply for a loan. So unless you have a need for a high limit, keep it to a reasonable level to give you the best chance possible to service when you apply for a home loan. If you are a high income earner or your total debt is/will be low or both, this will be less of an issue.
     
    Eric Wu likes this.
  3. Eric Wu

    Eric Wu Well-Known Member Business Member

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    hi @RedRoom, busy Credit history is not a good thing when applying home loans, I guess for your case the impact is likely to be small.

    the other thing with CC is, if you don't need a high limit, just ask the bank to reduce the limit to the minimum to help with servicing ( the max amount you could borrow).
     
  4. Dalien

    Dalien Member

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    I got my loan in September 18 with NAB...I had multiple cards and regular applications as I was chasing points and balance transfers. Think atleast 1-2 application every few months. Had 8 credit cards 1 week prior to loan application. Cancelled all but an Amex. Bank wanted proof they were cancelled which I gave...no issues...
     
  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    roll that out to an 90 or 95 lend, and the credit score will be very different.

    80 LVR or less, there is much more tolerance.

    ta
    rolf
     
  6. Bendigus

    Bendigus Well-Known Member

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    So you have a deposit sitting round for a house as well as credit card debt.

    Doesn't sound sensible to me. Would paying it off help. I guess if the debt is at 0% then that is okay.
     
  7. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    A single card application won't derail a home loan application on it's own. In combination with other credit enquires it might though. More than 3-4 credit applications (card, personal loan, home loan, etc) in a 6 month period could create issues.
     
  8. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    No. Unless your borrowing capcity is really tight - and the extra card reduces how much you can borrow.