PCP effect on mortgage

Money_Or_Cars
Money_Or_Cars Posts: 8 Forumite
in Motoring
I am looking into getting a new car on PCP. I can easily afford the monthly payments and totally understand what I'll be getting myself in for.

I have always had cars on finance (HP) and usually change my car every few years, hence the reason I'm considering going for a PCP deal which I believe will suit me better.

BUT, will this have an effect when it comes to applying for a mortgage? I'm 23 years old, and I'm able to comfortably keep saving for my deposit and pay for a car. I'm just worried it may come back to haunt me in a few years when I want to apply for a mortgage.

Anyone have any experience of this?

Thanks.

Comments

  • debtdebt
    debtdebt Posts: 949 Forumite
    It wouldn't have a negative effect unless you defaulted on the payments.
  • Herzlos
    Herzlos Posts: 14,683 Forumite
    First Anniversary Name Dropper First Post
    It'll go against you in terms of affordability - it's a monthly commitment to pay for the car, though it's no different to an HP commitment.

    When are you intending on buying and how long is the PCP? Might be worth keeping current car until mortgage has completed.
  • Money_Or_Cars
    Money_Or_Cars Posts: 8 Forumite
    As I get a lot of enjoyment from cars, I can see myself changing cars every time I come to the end of a loan agreement, thus always having an outgoing payment for a car - which is why I'm looking at PCP.

    I have a 4 year saving plan in place which should get me up to £24k (house deposit). The PCP deal is also 4 years.

    Is it only the monthly commitments that are taken into account when applying for a mortgage? Or would they be looking at the total debt of the car?
  • Herzlos
    Herzlos Posts: 14,683 Forumite
    First Anniversary Name Dropper First Post
    It'd cover both. Predominantly that you can afford the payments should rates go up significantly, so the monthly PCP payments will be the bigger factor.

    If the PCP runs out when you're about to apply for the mortgage, it might be best to make do without a new finance agreement until the mortgage has completed.
  • neilmcl
    neilmcl Posts: 19,460 Forumite
    First Anniversary Name Dropper First Post
    Money_Or_Cars wrote: »
    As I get a lot of enjoyment from cars, I can see myself changing cars every time I come to the end of a loan agreement, thus always having an outgoing payment for a car - which is why I'm looking at PCP.

    I have a 4 year saving plan in place which should get me up to £24k (house deposit). The PCP deal is also 4 years.

    Is it only the monthly commitments that are taken into account when applying for a mortgage? Or would they be looking at the total debt of the car?
    If you've no interest in keeping the car then why take out a finance deal at all, just lease it.
  • jimjames
    jimjames Posts: 17,588 Forumite
    Photogenic Name Dropper First Anniversary First Post
    It will also delay you being able to save enough for your deposit as well as impacting affordability for mortgage
    Remember the saying: if it looks too good to be true it almost certainly is.
  • pogofish
    pogofish Posts: 10,852 Forumite
    Name Dropper First Post First Anniversary
    When did mortgage issues become a subject for the motoring forum..?
  • jimjames
    jimjames Posts: 17,588 Forumite
    Photogenic Name Dropper First Anniversary First Post
    pogofish wrote: »
    When did mortgage issues become a subject for the motoring forum..?

    OP has also posted on the savings forum. But it's a fair question about the issues of buying a new car on PCP.

    There are plenty of threads here that explain why it's a bad idea
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Herzlos
    Herzlos Posts: 14,683 Forumite
    First Anniversary Name Dropper First Post
    I should also mention; getting enjoyment from cars doesn't require buying a new one on a finance deal. You can get some amazing cars for relative pocket change; whether big luxobarges like an XJ or something sporty like an MR2, Supra or XKS.
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