PCP car finance / effect on mortgage

matttye

I have a car on PCP finance. I've pretty much paid off the whole thing except for the balloon payment, which isn't due until April 2018.

Please can anyone confirm whether this will affect my affordability in the eyes of a mortgage lender? I don't think it should bearing in mind I could simply hand the car back at the end of the term.

Thanks

ACG

Speak to the lenders before hand.
The last example I had of this the lender did not have an issue with it - but it had to be explained to them beforehand to avoid making a wasted application and to ensure they were ok with it.

matttye

ACG wrote: »

Speak to the lenders before hand.
The last example I had of this the lender did not have an issue with it - but it had to be explained to them beforehand to avoid making a wasted application and to ensure they were ok with it.

Brilliant thanks.

matttye

A related question.

I owe £7k on my car, of which £4k is the balloon payment (figures are simplified).

I'm not sure whether I would be better off paying off the £3k (non balloon) part of my debt or using the money for a bigger mortgage deposit.

Want to move out this year and I'm only just starting to save again having paid £8k ish off my car over the last year, so I'd prefer to save the money but if people don't think that's a good idea I'd be grateful for your input.

Cheers

matttye

Bump - I'd be grateful for any ideas.

Cheers

ACG

You should sit down with a broker and go over the sums.

matttye

I don't have a deposit yet so seeing a broker is a bit premature at this point!

I think I'll just keep the money for now and then, if at the point I see a broker when I'm ready to buy, they advise me to pay off the remaining car debt then I'll do so.

Thanks!