Mortgage and loan debt advice

Sugar

Hi just looking for a bit of advice please from the brokers on here or anyone in the know
My husband and I have a personal loan which was increased last March to buy another car (well increased by paying off and starting new loan but with the same bank). We are thinking about moving house and need to save a bit more money to do so. Our loan payments are about £300 but I looked into extending the term to 5 years from now and it would about half our payments so they would be £150 a month. Would this look bad on my credit file in terms of what the lenders would see and think? Obviously it means we could save a bit more and pay off our credit card then when we apply for a mortgage to move it would affect the amount we could borrow can anyone tell me if the lenders would take the monthly payment, multiply by 12 and take off income? I'm sure that's what they used to do?
So worried about the mmr rules etc. last time I bought a house it was 5x salary and away you go. It's all new to me and seems so scary!
Would it make enough if a difference to what we could borrow to warrant paying the loan off first and saving for a bit longer for deposit and fees etc?
Thanks so much for anyone who got this far!

kingstreet

Lower monthly loan payments will mean a larger mortgage.

No. They no longer multiply the loan payment by twelve and take that off income. Lender affordability calculators are more sophisticated than that today.

Select a lender's affordability calculator and try it with £300, £150 and £0 and see what the difference in output might be.

Don't forget to enter things like student loan payments, dependents, childcare etc.

Sugar

Thanks very much for your advice it's greatly appreciated!

Do you think that extending the term (basically meaning a new loan) will go against us? Especially only a year and a half after taking a new loan?

Sugar

Also do you know which online calculators are closest to accurate? They seem to vary so much. Barclays give such a high figure but don't ask for any outgoings.
Thanks again.

lovedayuk

Hi,

Barclays only asks for your council tax monthly payments as they will use the national average for all the other bills. So they will not ask for things such as food, gas, electric etc.

Barclays goes up to 5.5 times your income but you must still meet there affordability calculator. Santander (Abbey) is another lender who uses 5 times.

Hopes this helps.

Chris

Sugar

Thanks very much for your replies they've helped a lot!

kingstreet

Sugar wrote: »

Do you think that extending the term (basically meaning a new loan) will go against us? Especially only a year and a half after taking a new loan?

No. They won't care.

Just make sure there's a gap between changing the loan and applying for a mortgage. We had a client this week who changed her car in September and her old finance with RCI is still showing as current, as is her new finance with RCI.

Sugar

Thanks Kingstreet!
One more quick question, my mum has been paying £100 by standing order into my bank towards my car for the last 4 years as I use it to drive her places too. Would this be taken into account anywhere?