Can I get a mortgage even though I have a loan?

Thrugelmir

kingstreet wrote: »

I must confess I'm finding it difficult to keep up with the day job and give as much time as I used to on here...

Write some guides that could be kept as sticky posts. Then you wouldn't have to repeat yourself so often.

Thrugelmir

camcw wrote: »

Two and a half years ago I made the mistake of taking out a £15k loan to help out my boyfriend at the time who had got himself into a financial mess because of a gambling addiction.

Whatever the reason behind the loan. It's yours.

Suggest you ask your ex to make overpayments to clear the debt quicker.

Failing this. Make overpayments yourself.

camcw

Thrugelmir, I understand that completely and accept responsibility for my mistake. However, unfortunately I can't afford to both save a deposit and pay off the loan at the same time, therefore my question to the forum was will I be considered for a mortgage with a loan on my file. As a first time buyer i'm not sure if it just rules me out completely and if that's the case then yes, I will have to delay getting on the ladder and look at other options.

ViolaLass

As I understand it, the bank will just subtract the outstanding amount on the loan from your deposit.

camcw

Eeek - that's not good news! That would set us back quite a bit. Can anyone confirm if this is the case?

kingstreet

No. It isn't.

The monthly payment will form part of the affordability calculation which takes into account your income and your outgoings.

ViolaLass

I stand corrected.

kingstreet, why won't they subtract it from the deposit? Isn't it the same as 'borrowing the deposit' which is often mooted by newbies?

buttonmoon

It depends. I have a loan with an outstanding balance of 9k. However, I was only looking to borrow 2 x joint salary so affordability wasn't a problem. If you are looking to borrow a high multiple and you have a loan I think you would have a problem. However, I would advise that you need to speak to a broker as not all mortgage companies look at outstanding loans in the same way.

kingstreet

ViolaLass wrote: »

I stand corrected.

kingstreet, why won't they subtract it from the deposit? Isn't it the same as 'borrowing the deposit' which is often mooted by newbies?

I don't know any lender which has ever done what you are describing here, sorry.

It is normal for loan payments to be factored-in to affordability calculations and this will see a lower maximum mortgage than would have been the case.

I can only suggest the OP carries out trials on different lender affordability calculations with and without the monthly loan payment to see the impact.

ViolaLass

kingstreet wrote: »

I don't know any lender which has ever done what you are describing here, sorry.

I have seen cases on here where someone has said "It will take me forever to save a deposit, can't I just get a loan and use that?" and others have replied that no, they can't because the bank will see right through it and realise that their net savings are zero.

It seemed logical to me but I guess I got the wrong end of the stick.