Carrying balances is common and is not the same as having bad credit. Lenders look at how much you owe, how much of your limits you use, what the payments do to affordability and, above all, whether you have kept up with them. Missed card payments, arrears or defaults usually matter more than the balance itself. The outcome still depends on your full circumstances.
Many people are also asking whether they should remortgage to clear their cards. This page covers both questions. For the wider picture, see our main page on debt consolidation remortgages.
On this page
This page covers
- Reason for remortgaging
- Consolidating debtsSecuring debts on your home carries extra risk and needs careful thought.
In short
- Card balances alone rarely stop a remortgage, but they count towards affordability.
- Missed payments, arrears or defaults on cards usually matter more than how much you owe.
- Clearing cards with your mortgage secures that debt on your home and can cost more in total.
- Some lenders may pay card providers directly, or require named cards to be cleared on completion.
Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. Borrowing over a longer term can mean paying back more in total.
How does credit card debt affect a remortgage application?
Lenders look at your cards in two ways. Card payments count as committed outgoings in the affordability check, and some lenders may base this on a share of the balance rather than the minimum payment, so large balances can reduce what they will lend. Your credit file also shows each card’s balance, limit and monthly payment history.
| What lenders may see | Why it may matter |
|---|---|
| Balances | They add to your committed outgoings and can reduce the amount offered |
| Credit utilisation | Using most of your limits can suggest stretched finances, even if you pay on time |
| Payment history | Late or missed payments, especially recent ones, tend to weigh most |
| Recent applications | Several new cards in a short time can look like reliance on credit |
A general guide. Lenders apply their own scoring and criteria, so not all weigh these points the same way.
Why missed card payments matter more than the balance
A large balance paid on time every month tells a lender something very different from a small one with recent missed payments. Late payment markers stay on your file for 6 years from when they are recorded, and a defaulted card shows for 6 years from the default date, even if you clear it. See remortgaging with missed payments and remortgaging with defaults.
If your card provider has written to you about persistent debt, where you have paid more in interest and charges than off the balance for a long period, treat it as a prompt to get free advice before deciding anything involving your home.
Should you remortgage to pay off credit cards?
Moving card debt onto your mortgage can cut your monthly outgoings, because mortgage rates are usually lower than card rates and the debt is spread over many years. The trade-offs are just as real.
| Point to compare | Keep paying the cards | Clear them with a remortgage |
|---|---|---|
| Security | Unsecured. Falling behind can lead to defaults or court action | Secured on your home, which is at risk if you fall behind |
| Interest rate | Usually higher than mortgage rates | Usually lower, though adverse credit rates are often above high-street rates |
| Total cost | Depends on how quickly you repay | Can be higher in total, because interest runs for many more years |
| Extra costs | None, unless you move to a balance transfer card | Possible fees, plus early repayment charges on your current deal |
A general comparison, not advice or a quote. Your own figures will differ.
Overpaying, or putting the card portion on a shorter term, can reduce the total. Our guide should I remortgage to pay off debt? works through the decision.
Alternatives to using your mortgage for card debt
- A 0% balance transfer card. More of each payment clears the debt, but there is usually a fee, the offer ends and recent missed payments may rule it out.
- Talking to your card providers. If you are struggling, they may agree reduced payments or freeze interest.
- A debt management plan. It keeps the debt unsecured, though it affects your credit file. See remortgaging with a debt management plan.
- A second charge mortgage. It leaves your current deal untouched, which may help if you face early repayment charges, but it still secures the debt on your home.
Free, impartial advice is available from MoneyHelper, StepChange and National Debtline.
What happens to your credit cards after completion?
Some lenders may pay card providers directly from the new loan. Others may release the money to you but require named cards to be cleared, and ask for proof. Depending on the lender, affordability may be assessed with or without the cleared cards in your outgoings.
Closing cleared cards removes the temptation to use them, while keeping one with a low limit keeps some active credit history. The biggest risk is running balances up again, leaving you with a larger mortgage and new card debt. If you also have missed payments or defaults, see consolidating debt with bad credit.
- Get a settlement figure for each card shortly before completion.
- Check each card shows a zero balance on your credit file a month or two later.
What may shape a remortgage when you have credit card debt
| Factor | Why it matters |
|---|---|
| Total card balances | Lenders may count your balances, or payments based on them, as committed outgoings. |
| Credit utilisation | Consistently using most of your combined limits can suggest stretched finances. |
| Payment history on your cards | Recent missed payments usually weigh more than the size of the balances. |
| Defaults or payment arrangements | Whether any card has defaulted or is on a reduced arrangement, and when. |
| Whether cards will be cleared | Some lenders may leave cleared cards out of the affordability calculation. Others may not. |
| Loan to value | Adding card debt raises your LTV. You can estimate yours with our LTV calculator. |
| Early repayment charges | Charges for leaving your current deal can outweigh any saving from consolidating now. |
These are general points, not lender rules. Each lender sets and changes its own criteria.
Information an adviser may ask for
You don’t need all of this to make an enquiry. It helps to know where to find it, because an adviser is likely to ask about most of it.
- Each card’s provider, balance, limit and monthly payment
- Which cards you want to clear or close
- Your credit reports from Experian, Equifax and TransUnion
- Your mortgage balance, deal end date, any early repayment charges and an estimate of your home’s value
- Proof of income and a realistic monthly budget
Frequently asked questions
Does a high credit card balance mean I have bad credit?
No. A balance on its own is not adverse credit. What shows as adverse is missed payments, arrears, defaults or court action. A high balance can still affect a remortgage through affordability and utilisation, so paying it down before you apply may help.
Should I pay off my credit cards before applying to remortgage?
Reducing balances can improve affordability and lower your utilisation, if you can do it without leaving yourself short. Updated balances can take a month or two to reach your credit file, so time it around your deal end date and keep enough back for fees and emergencies.
Do I have to close my credit cards if I consolidate them?
Not always. Some lenders may require named cards to be closed, or ask for proof the balances are cleared. Otherwise it is your choice, but cards left open make it easier to build up new debt on top of the bigger mortgage.
Is it cheaper to put credit card debt on my mortgage?
The monthly cost is often lower, but the total may not be. Mortgage interest runs for many more years, so you can repay more overall, even at a lower rate. Fees and early repayment charges count too, so compare total costs, not just monthly payments.