Outstanding loan or credit card, next mortgage?

MSM78

Hi all

My 3yr car PCP is up next January so I have a little time to plan ahead. At the end of the deal I'll have an outstanding balance where my options will include -

• Trade in and start again (whatever equity goes against the next car)
• Sell the car privately, clear the loan, keep the difference
• Pay off the final balance and keep the car

I tend to always buy new cars and have had my last four this way.

Normally I'm keen to renew my car but I got a great deal on this one and am still in love with it so considering hanging on, maybe for an additional year.

Now, my question relates to, considering the above, I'm looking to move house next year(ish) so will be exploring my options in regards to-

• Traditional move, sell up, move to new house, new mortgage
• Investment venture, rent out current home as a long term BTL/LTB, then move to new house, new mortgage(s)

Obviously when the time comes I'll get proper advice but, I'm quietly confident this is achievable, I should be viewed as a good risk, respectable income, healthy deposits etc.

Other than my car / new car, I will not have any other debt so I'm wondering how lenders might view outstanding dept.

If I change the car it will probably be an outgoing loan of about the same amount, £400 per month.

If I keep the car I'll probably owe about £10000 at the end of my PCP which I am considering paying off.

I could re-finance but instead I'm considering paying this off with an interest free card (I have these available) and paying this down at the same monthly amount, tarting where necessary, until I get bored and want to change the car. I'd save a great deal this way and have better flexibility over a loan if I want to change it.

So in essence, other than zero debt, what's better in a lenders eyes come mortgage application time? Loan(PCP) outstanding or credit card outstanding?

Thanks for reading!

kingstreet

The lender will deduct the cost of the commitment from your income, regardless of what it is. Credit card deductions are typically 3% of the balance.

The impact will depend on what the monthly cost or equivalent are.

Play around on a lender's online affordability calculator and see what the outputs are;-

http://www.nationwide-intermediary.co.uk/calculators/aff_calc

Nationwide, for example.

MSM78

Thanks for the prompt reply. So in essence, there's no difference to a lender whether the debt is against a loan or a credit card?

I suppose I just assumed a debt against a car looked better than an un-secured credit card debt