will new car finance affect my chances of getting mortgage?

f1slikki

Hi there, I know this may sound like a silly question but I am looking into getting a mortgage in the next few months but I am in desperate need of a newer vehicle due to work purposes etc but I am holding back on going for finance incase this has a bearing on the mortgage although I could easily afford the payments I just dont want anything to get in the way of me getting the mortgage as getting new place is my main priority. (I have just answered my own question really haven't I).

any way if I was going for car finance & mortgage this would be my basis:

Household monthly income (without overtime/bonuses) £2,340
mortgage would be £723
no other credit commitments other than council tax,food,fuelapprox £400 per mth
therefore if I get new car this would be approx £350 per mth

so going by these calculations I would still have around £850 per month left so I could afford it but how would a mortgage company look at this type of application if recent finance had been applied to my credit file?

many thanks in advance for any help or advise.:T

herbiesjp

The lender would annualise any regular credit commitments and then deduct from your income before applying income multiples or affordability calculator

SO if finance was £250pm and your gross income was £24k

They would do 12x£250 = £3000

Then £24k - £3k = £21k

And then use the £21k on the multiples/affordability

Just remember that some lenders have their own criteria as to what different people should have left as dispoable income in order to agree a mortgage i.e single person, couples no dependents and couples with dependents

So even if you think you are happy with "x" amount of money left over each month, if it is outside a lenders criteria, they may not agree the mortgage for you

koexelek

Although loan commitments affect your affordability, if you pay them all on time it normally has a positive effect on your credit score