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How terrible to take out a loan ahead of mortgage application?
Trimbles
Posts: 1 Newbie
Good evening! Long time reader, first time poster.
Myself and my partner are looking to buy our first home in the new year - we have saved £30k and received a £20k gift from my mother so should have enough for a 20% deposit on a ~£200k house.
I was advised I would be offered a company car so have been looking forward to this as my car is on it's way out however I have now also been offered the option of a car allowance instead.
Looking at the figures the car allowance seems the better option. After tax/NI it would work out at an additional £240/month which is around the same cost as a £9k loan over 3 years so I could buy a new car and my take home pay would be unchanged. Obviously this has the advantage of actually owning the car but I am concerned about the impact this would have on the mortgage application.
Potentially I could stick with my current car for a few more months but not too much longer - would I be best off waiting until after buying a house before looking to take out a loan?
Or indeed would it be better to just go for the company car as this will not have any impact on our house plans? Or pay for new car out of savings and reduce our deposit amount?
I am very confused as to what is the best course of action and would appreciate any advice.
Many thanks
Myself and my partner are looking to buy our first home in the new year - we have saved £30k and received a £20k gift from my mother so should have enough for a 20% deposit on a ~£200k house.
I was advised I would be offered a company car so have been looking forward to this as my car is on it's way out however I have now also been offered the option of a car allowance instead.
Looking at the figures the car allowance seems the better option. After tax/NI it would work out at an additional £240/month which is around the same cost as a £9k loan over 3 years so I could buy a new car and my take home pay would be unchanged. Obviously this has the advantage of actually owning the car but I am concerned about the impact this would have on the mortgage application.
Potentially I could stick with my current car for a few more months but not too much longer - would I be best off waiting until after buying a house before looking to take out a loan?
Or indeed would it be better to just go for the company car as this will not have any impact on our house plans? Or pay for new car out of savings and reduce our deposit amount?
I am very confused as to what is the best course of action and would appreciate any advice.
Many thanks
0
Comments
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If your net car allowance covers the car payments it is cost neutral so should not affect a later mortgage application.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
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