Mortgage Application & Car Finance (first-time buyer, please help)

Jimbeef

Hi all,

I know there are a lot of questions on the internet about this one, but I wanted to put my own situation down and see what people can advise me on.

We are a couple looking to buy our first home and currently seeing how much we can borrow. Sadly my car died last week and I need to get a replacement. Ideally not a cheap runaround as I need the miles for work. Therefore looking at new/ex-demo on finance.

I know lenders look at affordability but would they see a personal loan and PCP in different lights? E.g. Car costs £10k - You get a personal loan for £10k with repayments at £220. OR you get it on PCP for £130 a month with an OPTIONAL balloon payment at the end. Will the lender care that the monthly repayments are lower with PCP or will they just see the total debt and assume you'll be paying the balloon payment at the end?

Also, regarding said balloon payment - would it be wrong for a lender to assume you'll be paying it? My assumption was that the balloon payment is not part of the actual credit agreement?

Sorry for my ignorance - both mortgages and these car finance things are all new. Help would be hugely appreciated guys, thanks so much in advance. Pulling my hair out over here!

csgohan4

Try car brokers like drivethedeal.com, carwow etc you might get a better deal.

Bare in mind cars take weeks to be ready if new

AnotherJoe

I recall when my daughter was getting a mortgage recently then her balloon payment was counted against her as if it was a loan for that value she owed. I recall that because of course she didn't have to pay it so it seemed mad to me. Maybe it's different depending on the lender. Hers is Santander.

Jimbeef

Still seems weird and harsh to me for them to include the balloon payment, especially if you have GAP insurance to cover a write-off/theft.

Typhoon2000

I am sure the whole credit amount will be included on the credit reports as she will be paying interest on the full amount of the car financed.

AnotherJoe

Jimbeef wrote: »

Still seems weird and harsh to me for them to include the balloon payment, especially if you have GAP insurance to cover a write-off/theft.

And your point is?

End of the day, they are lending the money, they can make the rules.

To play devils advocate, to not take that into account would be like them potentially rolling that payment into the mortgage, and they dont wish to be used for car finance, just property. Even if you wont, some will.

Same way they dont especially like to be used for loan consolidation even if overall your payments will reduce. Every Pound thats used to pay for something that isn't a house, is a distraction from what they lend for plus leaves them less security.