As title really.. having car problems and thinking about upgrading which would mean paying off an existing debt (3k) and lending 5/6k. Would this do any damage for me when I'm hoping to buy a house and take a mortgage at the end of the year..
Will taking out a loan affect me getting a mortgage ?
- Thread starter Quinnaay
- Start date
Soldato
Yes because it will be counted as an outgoing, but is viewed better than uncontrolled debt. Someone else will be more knowledgeable than me.
It will appear on your credit file and you will have to disclose it on the application. It will come down to lots of other criteria though so in itself it's unlikely to damage your application unless you're declined or get behind in repayments or you're judged to have too many outgoings for your income
Associate
Yes it will affect your chances, but they care more about the monthly cost than duration. All about affordability.
Soldato
Yes it will. Exactly how much depends on how much you earn and what the monthly cost is. As others have mentioned it's all about your affordability rating, which each mortgage lender will calculate differently.
Soldato
- Joined
- 20 Oct 2005
- Posts
- 5,938
This
Caporegime
- Joined
- 21 Jun 2006
- Posts
- 38,372
As long as you aren't trying to borrow the absolute maximum in terms of your mortgage and your disposable income is still high you will be fine.
Most banks will let you borrow between 4-5 times your HH income if you have low outgoings. The higher your outgoings then the less you can borrow.
So the more you spank on loans, etc, the less they will give you. It's all about your monthly disposable. So it may be worthwhile borrowing your car loan over a longer period such as 5 years.
Remember just because you take a loan out over 5 years doesn't mean you cannot pay it back within 5 days. You can always overpay without penalties if it's a decent bank.
Most banks will let you borrow between 4-5 times your HH income if you have low outgoings. The higher your outgoings then the less you can borrow.
So the more you spank on loans, etc, the less they will give you. It's all about your monthly disposable. So it may be worthwhile borrowing your car loan over a longer period such as 5 years.
Remember just because you take a loan out over 5 years doesn't mean you cannot pay it back within 5 days. You can always overpay without penalties if it's a decent bank.
Associate
- Joined
- 10 Apr 2008
- Posts
- 1,010
Don't miss any payments otherwise you'll have trouble getting the mortgage.
Yeah I've had a number of small loans over the years for cars etc and never missed a payment my credit score is decent. I will have to sit down and plug some numbers in then.. and potentially try some affordability calculators to see what I may be able to borrow before and after a loan. I suspect the monthly repayments would only increase by about 40per month which shouldn't be too bad.
Soldato
I posted a thread on this a few months ago. We took out a 25k loan about 2 months prior to applying for a mortgage. We had no issues in being given a mortgage as it was just factored into affordability criteria 
ThanksI posted a thread on this a few months ago. We took out a 25k loan about 2 months prior to applying for a mortgage. We had no issues in being given a mortgage as it was just factored into affordability criteria
Associate
Just don't miss a payment!
Not sure my car is going to hold out really.. ideally wanted to just keep it but going to end up trading it in and trying to upgrade while I'm at it.
Caporegime
I posted a thread on this a few months ago. We took out a 25k loan about 2 months prior to applying for a mortgage. We had no issues in being given a mortgage as it was just factored into affordability criteria
Similar here, no issues getting the absolute best mortgage product we could find, even with a £30k+ car finance package on the go.
Soldato
That's good to hear, I need to remortgage, and got about 10k on credit cards but the amount i want to borrow is less than 4x annual salaries, and we have low outgoings (no kids/other finance etc)I posted a thread on this a few months ago. We took out a 25k loan about 2 months prior to applying for a mortgage. We had no issues in being given a mortgage as it was just factored into affordability criteria
Soldato
Not sure how much it was factored in but it's worth mentioning that we took the loan out with the same lender as our mortgage (First Direct).
I presume that wouldn't have made a difference though as we previously had 2 loans with other lenders when applying for the mortgage which wasn't a problem.
I presume that wouldn't have made a difference though as we previously had 2 loans with other lenders when applying for the mortgage which wasn't a problem.
Soldato
Why are you lending someone 5-6k if you've debt to pay off and a car to upgrade?
He's not. He has and existing 3k debt which will be consolidated into the new loan and is wanting to borrow an additional 5-6k. Presumably to purchase a new car/repair his.