Ridiculous mortgage affordability calculation

Laurs79

I went through a telephone application with my work for a staff mortgage this evening. I have a £5800 PCP commitment left on my car - I can either hand it back after 49 months or pay the remaining balance on it. I can even hand it back now.

But, based on continuing to keep the car, my offer of a mortgage dropped by £75,800. Have you ever heard the likes? A £5800 balance to pay on my car would reduce the amount of borrowing for a mortgage by £75,800??

Someone please tell me - is this the norm?

Thrugelmir

What's the monthly charge you are paying. The final balance isn't relevant.

davisc02

Unforunately thats how they are at the moment, any sort of credit agreement, car loan etc will get marked down heavily in terms of what you can borrow. If anyone is attempting to get a mortgage in the near future you need to pretty much get rid of all your loans and credit cards if you want the amount you think you should get.

kingstreet

How many different lenders' calculators have you used to establish what you can borrow?

Laurs79

Thrugelmir - I'm paying £167 per month to the car.

davisc02 - I also have a loan & credit card. The credit card is 0% till April 2017 (just done a 0% balance transfer for 33 months & I'm paying a fixed amount each month to ensure it is paid off by the end of the 0%) & the loan is 7.2% APR with 38 months left on the loan.

kingstreet - I've looked at a number of them & all completely different outcomes, bizarrely. Not anywhere near as bad as £17,855 I was offered through my staff mortgage based on keeping my PCP car though.Yup - £17855 !!!!

Out of the PCP, staff loan & 0% credit card - does anyone know what a mortgage lender looks at more favourably out of the credit card & staff loan if I concentrated on overpayments one of them to pay off in the next 6 months? Would the amount I get offered for a mortgage dramatically increase with one over the other?

Any help with this would be hugely appreciated, thanks

Penelopa.Pitstop

When I went through Nationwide calculator, my affordability went down by the amount of settlement to the leasing company - £46K. However I'm only going to pay £13K during the 2 years lease and I have 18 months left, so circa £10K to pay.

Batchy

They assume you wont just need a car for 49 months... so even if you hand it back once you get the house/ mortgage you will probably sign upto another...so its about you habits more than you outgoings, which I think is wrong, as you will adjust your habits to suit affordability if necessary... (well some or most do)

kingstreet

Loans, HP etc you enter the monthly payments.

Credit cards, if asked you enter the balance. If asked for monthly cost, use 5% of the balance as the monthly payment.

NoOneAround

Something that has been bothering me a lot so though tIwould ask the question on this forum... I have a lot of unsecured. debt and have sought debt help - dealing with that now, previously have had an immaculate credit record. My fixed rate runs out next year. I will not be able to move mortgage supplier and shop around because of the recent debt issues. Will the mortgage supplier be able to give me another fixed rate or other deal - or will I have to stay on their standard deal? We also have just under half the mortgage on interest only with only 10 years left to repay. By then both children, who will inherit house from us anyway, will be working age. If we don't manage to pay off mortgage, Would they be able to get a mortgage and "buy" the house? there would be plenty of equity. Apologies if this is a silly question - just trying to think my way through the different outcomes.....