Mortgage - repaying car loan (Accord Mortgages)
Options
![[Deleted User]](https://us-noi.v-cdn.net/6031891/uploads/defaultavatar/nFA7H6UNOO0N5.jpg)
[Deleted User]
Posts: 0 Newbie
I've got a car loan at the moment, which is pretty extortionate.
Due to pay it off early (about £8k), however I've just looked at affordability calculators (Accord for this one, as it's very likely that's who I'll be going with). If I enter £228 as monthly loans/HP to remain outstanding I get total lending value of £127,965 based on current income (assuming I clear all credit cards etc).
If I clear the £228 and put £0 (i.e. pay it all off, but have a lower deposit). I STILL get £127,965,
That can't be right!? Surely £228 being paid out should reduce the amount available. I understand sometimes credit card balances less than £x are disregarded, or loans to finish within 6 months etc - but this would have 4 years left on it. Seems a big commitment to be disregarding!?
Financially it makes more sense to pay it off now (stop paying interest) - but if leaving it in place means I've got a bigger deposit and ultimately more chance of getting a house then I'd be (somewhat strangely!) better off leaving it to run to term!?!?
Anyone got any experience with what kind of deduction they make for HP? As I struggle to believe it's 0!?
Due to pay it off early (about £8k), however I've just looked at affordability calculators (Accord for this one, as it's very likely that's who I'll be going with). If I enter £228 as monthly loans/HP to remain outstanding I get total lending value of £127,965 based on current income (assuming I clear all credit cards etc).
If I clear the £228 and put £0 (i.e. pay it all off, but have a lower deposit). I STILL get £127,965,
That can't be right!? Surely £228 being paid out should reduce the amount available. I understand sometimes credit card balances less than £x are disregarded, or loans to finish within 6 months etc - but this would have 4 years left on it. Seems a big commitment to be disregarding!?
Financially it makes more sense to pay it off now (stop paying interest) - but if leaving it in place means I've got a bigger deposit and ultimately more chance of getting a house then I'd be (somewhat strangely!) better off leaving it to run to term!?!?
Anyone got any experience with what kind of deduction they make for HP? As I struggle to believe it's 0!?
0
Comments
-
I don't think they have 'disregarded' it but have probably determined that you can afford to pay both the loan and the mortgage. I think they see at as less risky than a credit card because the payments are steady and therefore payments won't fluctuate unlike with a credit card. I am not an advisor, so don't use this as gospel!0
-
Sometimes an LTI cap is applied and this overrides a certain amount of credit.
In such a case, the amount offered won;t change regardless of the credit being repaid on completion, or not.
Other lenders will not ignore credit, even if it is to be repaid.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Thanks both, that makes sense.
Probably is the income cap - I've used current salary rather than higher that I expect it to be by time of app. Allowing for overtime being counted at 50%, it looks like it's close to 4.5x - in reality, whether they'd actually give that amount in my circumstance is questionable.
Got a decision to make about the loan then! I'll have a look at Nationwide's affordability first, as they're the only other potential realistic lender.
Thanks0
This discussion has been closed.
Categories
- All Categories
- 343.2K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608.1K Mortgages, Homes & Bills
- 173.1K Life & Family
- 247.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards