Car finance/Lease and Mortgage Question

rags2riches_2

Hi all,

Me and my wife are moving back in with the parents for an 18 month period to live rent and bill free to enable us to save for a deposit for our first house.

We currently live in a city and I don't require the use of a car. When we move back in with the folks in January 2017 I will need a car.

I'm unsure what is the best option. I will need a car but I'm worried about adding car finance to my credit file and the impact this will have on mortgage applications.

I have considered leasing a car for the period we are at my parents and applying for mortgages.

Even with a car I will still be in a position to personally save around £2,000 per month and I'm confident I can show I can afford it.

Any advice?

kingstreet

Any payment will see your mortgage borrowing power reduce.

If you want to estimate the impact, enter your details in different lender online affordability calculators with and without car payments and see the difference in the outputs.

amybenjaminandemilysmum

I wouldn't worry about it affecting your credit score as such but It will impact on your affordability which in turn can affect how much they lend you. I was in a similar situation with a company car paid through my wages and was advised to send it back 3 month before applying for a mortgage.

AllyMac

Why do you need car finance at all?
You can save £2K every month. So - buy a car for £1K and save half the amount in January.
Not just because of affordability, but because why start this golden opportunity to save money by taking on debt?!
My 2003 Focus is worth less than £1K and is perfectly reliable, looks fine, and has gone through last 5 MOTs which nothing more than wear and tear on wipers and tyres!

SavingSteve

Agree with AllyMac, you need a car, not a new car. Car finance of any form will effect your affordability. Buy a reliable used car, even if you want to spend more than £1k it is likely a better bet.

rags2riches_2

AllyMac wrote: »

Why do you need car finance at all?
You can save £2K every month. So - buy a car for £1K and save half the amount in January.
Not just because of affordability, but because why start this golden opportunity to save money by taking on debt?!
My 2003 Focus is worth less than £1K and is perfectly reliable, looks fine, and has gone through last 5 MOTs which nothing more than wear and tear on wipers and tyres!

This would be the sensible idea of course but I do want a decent car as I haven't had the pleasure of owning one for over 6 years.

It's not a class of 'wanting it all' I just want to have a decent car without negatively impacting my mortgage payments.

I've been through an affordability calculator and with all expenses we can still get more than the mortgage we would be looking for and we will have 2k left over each month not including mortgage payments in the future taking everything in to account.

As our mortgage will likely be in the £800 mark per month that leaves 1.2k left per month for 'stress' situations. So even with a a car I can show there is enough left I guess.

glentoran99

rags2riches wrote: »

This would be the sensible idea of course but I do want a decent car as I haven't had the pleasure of owning one for over 6 years.

It's not a class of 'wanting it all' I just want to have a decent car without negatively impacting my mortgage payments.

I've been through an affordability calculator and with all expenses we can still get more than the mortgage we would be looking for and we will have 2k left over each month not including mortgage payments in the future taking everything in to account.

As our mortgage will likely be in the £800 mark per month that leaves 1.2k left per month for 'stress' situations. So even with a a car I can show there is enough left I guess.

not sure your thinking is correct there, if that's what you will have while living rent and bill free you will have a lot less when you are out on your own

d0nkeyk0ng

I agree with the others. Buy a cheap "banger", get the mortgage, then look at what you can afford and go for it.

rags2riches_2

glentoran99 wrote: »

not sure your thinking is correct there, if that's what you will have while living rent and bill free you will have a lot less when you are out on your own

Apologies I wasn't clear. I am currently paying rent/bills etc. now and I have included these into the calculator. We will have 1.2k left after paying all bills etc. as if we were in our own house.

rags2riches_2

d0nkeyk0ng wrote: »

I agree with the others. Buy a cheap "banger", get the mortgage, then look at what you can afford and go for it.

Could I not just lease a decent vehicle for the period we are living with the parents? Monthly costs are lower than buying and I still get a decent car?

glentoran99

rags2riches wrote: »

Apologies I wasn't clear. I am currently paying rent/bills etc. now and I have included these into the calculator. We will have 1.2k left after paying all bills etc. as if we were in our own house.

Sorry im probably getting more in depth than necessary or wanted but


1.2k + bills + mortgage should be more than 2k for savings should it not as you wont have the bills and mortgage from January?