Impact of loans on mortgage amount

welshchocolatelover

Hi,

We have a mortgage with Halifax, £168000. Our product has ended and we're currently on svr until a tempting new product comes out (as advised by our ifa). We will be staying with Halifax (house has been "valued" by Halifax at £170000 so lack of equity - ifa says our only real option is to stay put for now with Halifax). We aim to begin overpaying on the mortgage to try and claw back some of the equity we had a few years ago before everything went the way it has (don't get me wrong, I know lots of people are this position). Does anyone agree/disagree with this advise?

Our combined salary is £63K (me @ £38K, DH @ £25K), plus we get child benefit for two children @ £135/month. We both have car finance - mine is £215/month, DH is £280/month. My question is this - when we come to apply for the new product with Halifax, will they do another credit check/finance check (our credit history is very good), and will our car loans have an impact on this. We don't want to borrow any more money, but I was worried that they could say because of the car finance they would withdraw some of our mortgage, or I am being a worrier?

TIA
WCL

Thrugelmir

Is the mortgage interest only or repayment?

welshchocolatelover

ATM it's interest only but will be looking to switch back to repayment ASAP. the car loans are our only debt.

beecher2

Halifax won't credit check if you're just getting a new product with no additional borrowing. Have you asked them what LTV you need to have before they will give you a new product? They were giving new deals to people with very little equity at one point, so worth phoning them to ask them the present situation. Staying on the SVR may well be your best option anyway, but always helps to know what present criteria is.

Thrugelmir

With effectively zero equity. You'll need to make a serious inroad into your mortgage debt before you'll have any new product options.

So it may may worth evaluating whether it would be better to repay the car loans first. As these will be at a far higher rate of interest.

I wouldn't be overly concerned with the car loans currently as far as affordability is concerned.

The high LTV is far more of an issue.

welshchocolatelover

beecher2 wrote: »

Halifax won't credit check if you're just getting a new product with no additional borrowing. Have you asked them what LTV you need to have before they will give you a new product? They were giving new deals to people with very little equity at one point, so worth phoning them to ask them the present situation. Staying on the SVR may well be your best option anyway, but always helps to know what present criteria is.

Thanks for this :-) Our IFA said that Halifax would still give a new product even with our poor equity, but at the mo we are financially better off staying on SVR (and pay extra off mortgage as we are currently on interest only). I trust our IFA, we've used him for years. My only worry was that we didn't have the car finances last time we remortgaged, though that said our salaries have significantly increased since then (about £20K increase) - my concern was that they would say we can't afford the current mortgage (which we can!) because of the multipliers combined with the loans. As you can tell, I'm completely clueless!

Thrugelmir

If you remain with the Halifax you won't remortgage. Merely change product. So no credit check is effected.

welshchocolatelover

Thrugelmir wrote: »

With effectively zero equity. You'll need to make a serious inroad into your mortgage debt before you'll have any new product options.

So it may may worth evaluating whether it would be better to repay the car loans first. As these will be at a far higher rate of interest.

I wouldn't be overly concerned with the car loans currently as far as affordability is concerned.

The high LTV is far more of an issue.

Thank you for this. The car finance we have taken out is very recent, unfortunately we both needed to do it at the same time for a few reasons (and we do need two decent cars given commuting and child care combos). Interest on these is 7.4%APR. We can easily afford these plus pay extra off the mortgage (we think we'll be able to over pay the mortgage by £800/month). We have no intention of leaving this house (I vowed last time that I'd never sell a house again lol!).

Thrugelmir

welshchocolatelover wrote: »

we think we'll be able to over pay the mortgage by £800/month

Sounds like you soon be bringing the balance down.

Visit the debt Free Wannabe board. Lots of advice and support on there. Bringing down the balance becomes addictive for many.