Will car payments effect mortgage?

Coded

Just a quick question.

One of our cars recently decided to give up, so we're shopping around for a new one.

We're looking at one which will end up costing £145 p/m for 3years @ 0% finance.

Will this have a big effect on the amount of mortgage we can borrow?

Thanks

Mark_Hewitt

What I was told when I took out a mortgage this time last year is that things like that where you have to make a specific payment each month, they just knock that off your income.

So whatever yearly income you have, it'll be reduced by £1,740 when they work out if you can have the mortgage.

The same with credit card debts etc.

YorkshireBoy

The car finance will take 1-3 months to appear on your credit file. That said, you'll be asked all your outgoings when you make the mortgage application so don't hide the fact!

My only experience is with YBS, who say 12 x your monthly loan payment will be deducted from your stated salary before applying their lending multiples. Additionally, they'll take 36% (approx 12 x 3% minimum payments) of your total credit card debt and subtract that as well.

Coded

No credit card debt. Only outgoings I have each month would be the car.

I have a credit card, but pay it off each month anyway, so I take it that doesn't come into it?

Surely though, we could apply for a mortgage and such now, and then buy a car and it wont affect?

Just thinking id rather secure the mortgage first, rather than buy a new car and find we can't get a mortgage on the house we wanted.

ultramagnetic_commuter

I think that's a sensible strategy. Getting a mortgage will be harder than an unsecured loan, so if it was me I wouldn't want to (potentially) jeopordise a house for a car.

mortgage-adviser-now

The car finance will dent your lending potential by around £7,000

Leave the car and buy the property first.

Make sure you can handle the big payment before you worry about anything else.

0% finance, 15% depreciation is never a good deal.

Hope that helps

I am a Mortgage Adviser

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