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  • FIRST POST
    • gowie45
    • By gowie45 11th Nov 17, 2:50 PM
    • 6Posts
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    gowie45
    Could PCP car loan affect a remortgage application?
    • #1
    • 11th Nov 17, 2:50 PM
    Could PCP car loan affect a remortgage application? 11th Nov 17 at 2:50 PM
    My wife and I want to remortgage our £250k house to borrow another £10k for home improvements in March / April

    Could our chances of being accepted be affected in any way by trading in my car to move to a new four year car PCP deal now?

    I currently have two years of a car loan remaining costing £340 a month.

    The proposed new PCP would see my car repayments REDUCE by £30 a month - but increase my overall debt level and increase the lending period to four years.

    My credit score is excellent.

    Could anyone in the know explain if the change of car finance might impact our remortgage chances at all?
Page 1
    • flashg67
    • By flashg67 11th Nov 17, 3:25 PM
    • 2,254 Posts
    • 1,489 Thanks
    flashg67
    • #2
    • 11th Nov 17, 3:25 PM
    • #2
    • 11th Nov 17, 3:25 PM
    Last time I went for a mortgage, they took into account the total debt - I had a PCP and credit card debts, rather than the monthly payments (Lloyds) and took the total debt from whatever they'd lend me.
    • Tarambor
    • By Tarambor 11th Nov 17, 3:37 PM
    • 1,552 Posts
    • 1,063 Thanks
    Tarambor
    • #3
    • 11th Nov 17, 3:37 PM
    • #3
    • 11th Nov 17, 3:37 PM
    Yes absolutely it will. It can affect the total amount you are offered, the interest rate and whether or not you'll pass any affordability tests based on your debt:income ratio.

    Your credit score is meaningless as you'll find if you go to the Credit File & Ratings board and see the number of posts with people with 999 from Equifax being refused loans and mortgages.
    • gowie45
    • By gowie45 11th Nov 17, 6:52 PM
    • 6 Posts
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    gowie45
    • #4
    • 11th Nov 17, 6:52 PM
    • #4
    • 11th Nov 17, 6:52 PM
    Thanks. But the point is that I would be replacing car finance currently running at £340 a month with car finance costing £310 a month.
    • Tarambor
    • By Tarambor 11th Nov 17, 9:52 PM
    • 1,552 Posts
    • 1,063 Thanks
    Tarambor
    • #5
    • 11th Nov 17, 9:52 PM
    • #5
    • 11th Nov 17, 9:52 PM
    Thanks. But the point is that I would be replacing car finance currently running at £340 a month with car finance costing £310 a month.
    Originally posted by gowie45
    Indeed you would but the total amount of debt you would have in proportion to your income would be increasing considerably and that could put a cap on what you want to borrow or make it more expensive.
    • jonesMUFCforever
    • By jonesMUFCforever 12th Nov 17, 12:28 AM
    • 24,171 Posts
    • 11,445 Thanks
    jonesMUFCforever
    • #6
    • 12th Nov 17, 12:28 AM
    • #6
    • 12th Nov 17, 12:28 AM
    I agree with all other posts - it will affect any mortgage application.
    Affordability and total debt will play a big part.

    What was fine say 3 years ago might not be so now or the near future.
    Lenders might (or might not) take a more negative view of your personal financial position.
    What goes around - comes around
    give lots and you will always receive lots
    • gowie45
    • By gowie45 12th Nov 17, 7:14 PM
    • 6 Posts
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    gowie45
    • #7
    • 12th Nov 17, 7:14 PM
    • #7
    • 12th Nov 17, 7:14 PM
    My confusion is this.

    What would be more important to Nationwide?

    My *monthly* outgoings to income affordability ratio? (42%)

    Or my *overall* debt to income ratio (currently 30% with current car loan, but higher with new car PCP)?

    Is monthly outgoings and incomings the key factor?

    Or your overall debt to income?

    Or both?!
    • tonycottee
    • By tonycottee 12th Nov 17, 8:27 PM
    • 1,056 Posts
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    tonycottee
    • #8
    • 12th Nov 17, 8:27 PM
    • #8
    • 12th Nov 17, 8:27 PM
    My confusion is this.

    What would be more important to Nationwide?

    My *monthly* outgoings to income affordability ratio? (42%)

    Or my *overall* debt to income ratio (currently 30% with current car loan, but higher with new car PCP)?

    Is monthly outgoings and incomings the key factor?

    Or your overall debt to income?

    Or both?!
    Originally posted by gowie45
    I disagree with the majority here. When I applied for a remortgage last month, they seemed more concerned with the monthly outgoings.
    I would ask over on the mortgage board.
    • gowie45
    • By gowie45 12th Nov 17, 8:41 PM
    • 6 Posts
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    gowie45
    • #9
    • 12th Nov 17, 8:41 PM
    • #9
    • 12th Nov 17, 8:41 PM
    Tony, that’s the impression I get.

    Any personal experiences anyone has of applying with Nationwide welcome.
    • Xbigman
    • By Xbigman 13th Nov 17, 2:17 AM
    • 2,945 Posts
    • 1,201 Thanks
    Xbigman
    When you have a FTF or phone interview with a rep they might appear to be more interested in one figure or the other but this is often a red herring. Ultimately they are entering figures into a computer and the computer makes the decision based on both criteria. It might be that you are tighter on one than the other but you need to be concerned about both. Only if you fail on one criteria and pass on the other should you consider changing anything.




    Darren
    Xbigman's guide to a happy life.

    Eat properly
    Sleep properly
    Save some money
    • fiisch
    • By fiisch 14th Nov 17, 1:00 PM
    • 201 Posts
    • 78 Thanks
    fiisch
    Recently remortgaged with a broker and it wasn't the total debt outstanding at all - it was the monthly cost which they took into account e.g.:


    Earnings of £110k per year
    £10k per year car payments


    110 - 10 = 100 x 4.5 = total available lending of £450k


    The amount of debt was irrelevant when we were re-mortgaging (and indeed when we bought a house). We have gone with Halifax on each occasion, but via a broker and other lenders were considered.


    We have 2x cars on PCP - the outstanding debt including the balloon payments are north of £50k, so if total debt was a factor we'd have just about been able to get a mortgage on a static caravan in North Wales.....
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