When applying for a mortgage loan, the bank examines your creditworthiness. Credit card ownership may become a grip on the applicant’s financial stability. Bankers will be willing to lend you less for their own housing than if you hadn’t. But the solution to this situation is surprisingly simple. The client applying for a mortgage will cancel the credit card and then re-establish it. Why is it more profitable?
Credit cards also reduce the applicant’s available mortgage income. For example, if a client has a card with a 100,000 credit limit, the bank may proceed as follows to calculate the applicant’s monthly income.
With a credit card, the bank can lend you less money
It will deduct CZK 5,000 from the available monthly income because this amount represents the minimum monthly credit card payment. Moreover, it does not matter if the client uses the loan or not. Because of the credit card, the bank may be willing to lend you only half of the money on the mortgage than without it. For credit cards, we sometimes find higher minimum monthly payments than 5 percent. Of course, in this case, the bank deducts even more money from the available mortgage applicant’s income. Like the credit card, negotiating an overdraft also makes it difficult to get home.
You don’t have to give up credit cards because of a mortgage
But the banks do differently when granting a mortgage loan. Responsible use of a credit card or overdraft does not include in the calculation of the applicant’s available mortgage income for example SMOD, Hyper bank, Dunoe, Raloand, EDRs or Ploand mortgage bank. On the other hand, they hold credit cards or overdrafts at Commercial bank or Siva bank. But even in such cases there is a simple solution. You will cancel your credit card or overdraft before you apply for a mortgage loan, and you can re-create it after you grant the loan.