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FTB Mortgage Calculator Query
gb-ww
Posts: 7 Forumite
I am saving up for a house deposit. I have about 18k saved up at the moment and save at least £500 per month.
I have a car loan, at 0% with about 8k left to pay, over 2.5 years. I pay £248 per month for this.
Halifax Mortgage Calculator says they would lend me roughly 30k more, if I didnt have any monthly credit commitments. This seems a bit backwards, as they are saying if I didnt have any commitment at 0% they would lend me an extra 30k at whatever interest rate.
My question is would I be better off paying off the car loan now, therefore cutting my savings by a large chunk, to increase the amount I could borrow? If I did this now while the interest rates on ISA's are relatively low, I wouldn't be losing too much there. I would also have an extra £250 per month available to go back into savings. Therefore in about 12 months when I would be looking more seriously at buying I would have a decent deposit saved, no car loan, and be able to borrow more for the mortgage. Plus have the additional £250 available for the costs of living once i;ve moved into the house, rather than paying for the car.
Does anybody have any thoughts?
I have a car loan, at 0% with about 8k left to pay, over 2.5 years. I pay £248 per month for this.
Halifax Mortgage Calculator says they would lend me roughly 30k more, if I didnt have any monthly credit commitments. This seems a bit backwards, as they are saying if I didnt have any commitment at 0% they would lend me an extra 30k at whatever interest rate.
My question is would I be better off paying off the car loan now, therefore cutting my savings by a large chunk, to increase the amount I could borrow? If I did this now while the interest rates on ISA's are relatively low, I wouldn't be losing too much there. I would also have an extra £250 per month available to go back into savings. Therefore in about 12 months when I would be looking more seriously at buying I would have a decent deposit saved, no car loan, and be able to borrow more for the mortgage. Plus have the additional £250 available for the costs of living once i;ve moved into the house, rather than paying for the car.
Does anybody have any thoughts?
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Comments
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As the loan you're currently repaying is interest-free I'd try and keep it. As mortgage calculators are only indicative anyway I wouldn't worry too much until you actually need a mortgage.
My (completely unqualified) advice would be to go through a mortgage application when you're seriously thinking about buying and until then keep paying off the car loan on a monthly basis.0 -
The question on everyone's lips:How much do you earn?0
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i think how it works is that they take your payment towards your debt off your income so then use the lower figure as the mulitiplier.. so if you want to buy now and need more either go to a broker and see what they can do, maybe reduce your payments to the minimum for a few months so your outgoings go down for calculation purposes?? obviously this will make the debt go on longer..
i am not qualified to give info BTW... just a guess....0 -
superfran_uk wrote: »The question on everyone's lips:How much do you earn?
not a lot judging by the figures they are giving... where can you get a place for under £40k??0 -
Superfran - I earn 23k, which should go up to 26.5k pretty soon and would have risen again by the time I want to buy.
Charliee - I didn't say you could get anything for under 40k. I said the mortgage calculator offers an extra 30k if I don't have any monthly credit payments.0 -
Charliee - I didn't say you could get anything for under 40k. I said the mortgage calculator offers an extra 30k if I don't have any monthly credit payments.
aaaaahhh.. now i see!!! i thought you meant an extra 30k on top of your deposit money..in which case i stand by by my original post.. its because they take your debt payments off your usable salary and base the mulitplier on that, so if you are paying £250 a month on debt that is £3000 a year off your salary so takes 9.5k off the amount you can borrow.. more or less... well its something like that anyway... if you are paying off more than the minimum out of choice then they may just take the minimum payment into account in the calculation0 -
Maybe the best thing to do would be to carry on paying the car loan at the moment, and then pay it off just before I am ready to get a proper mortgage quote0
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Maybe the best thing to do would be to carry on paying the car loan at the moment, and then pay it off just before I am ready to get a proper mortgage quote
That's an option, although you'll need to pay it off at least a month before or the loan will still show as outstanding on your credit check.
However, the bigger your deposit the better mortgage offer you'll receive so it's a catch-22. It may be worth getting a quote before you repay your loan.
Mortgage lenders will generally offer higher income multiples to customers with lower LTVs (less risk for them if you do get in financial trouble)0
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