Effect of other debts on mortgage application

Valley

I'm about to start a new job which will initially be a 100 miles a day round trip.

I'd like to swap my ageing petrol engined car for a diesel but would need a loan for about £10K for the car I want

Over the next few months we're then going to move closer to my new job.

My IFA has advised me to hold off taking out a loan before we get a mortgage approved but that may be months off.

So the question is should I listen to my IFA or ignore him and get the car.

Figures are:-
Joint salary £65K
Deposit £75K
Max purchase price of new house £250K
Current debt £1900 (another car loan)

fistfullofdollars

Hold off on the car. Houses are expensive things!

Any outstanding debt will be seen as a commitment and therefore reduce the overall amout you can borrow. If you really want the car... Reduce the deposit to £65k.

Valley

That was my IFAs point which I completely understand but I can't believe given the multiples many people are borrowing that a £10K loan would have an impact on our situation, we're only looking at a multiple of 2.7x max

I'm not keen on paying for a car with a mortgage either.

That's 2-0 against me so far, if the consensus is don't do it I won't!

CLAPTON

presumably the APR you will pay on the loan will be higher than the mortgage rate, so given you still have a very reasonable deposit and require a reasonable salary muliple, it makes no financial sense to get a loan.

Valley

Surely from a money saving point of view that's not a good option as you pay back much more over the period of a mortgage.

I suppose I could offset that though by overpaying to the amount a loan would cost me.

AWT

I was told by the Woolwich that they take all your monthly unsecured loan payment amounts, add them together, and multiply the total by 12 (months).

This is then added to your mortgage amount (less deposit of course), and as long as you don't go over your salary multiple they're not worried. Their term was 'still being within a responsible lending limit'