Will getting credit checked for car finance affect my mortgage?

1x14xx

Hi all,

Just want to start by wishing everyone a very Merry Christmas!

I've exchanged contracts for a new build property a few weeks ago which I'm over the moon with as it's my first property and I'm very much proud of getting myself on the ladder at a relatively young age, only issue is it's due for completion in March which feels like ages away!:(

Anyway I would like to purchase a new car on finance and I've managed to get (what I feel) is a relatively good deal on a high spec factory order which will arrive also in March.
Slight issue I have is for the car to be ordered I'll need to do a finance proposal which means a credit check, I don't have a problem with this but will this mean the finance agreement showing on my report as soon as that takes place or will it appear when the car actually arrives and I sign the agreement? If the latter is the case the dealer have said they'll happily delay the signing of the agreement until I complete and get the keys to my property during that month. I don't want nothing harming my mortgage as I couldn't imagine it falling through at the last minute and losing my deposit, fees etc. but the developers won't get the remainder of the money from my lender till completion. If I go ahead with this and they final check me before releasing funds to discover I got credit checked for a car finance three months ago will they get suspicious?

All i want to know is will getting credit checked show the finance agreement on my credit report right away or when the vehicle is built and I go in to collect and sign the documents? It's at a point where I feel do I miss out on a possibly good deal and not risk it or go ahead with the checks knowing it won't do any harm? I have not agreed to nothing yet just want to get some opinions. I've read many posts on here about mortgage lenders possibly doing final credit searches to see if people have taken out new agreements etc. and in some cases having offers pulled. Obviously it's different for everyone so no one knows but what are the chances? I mean I wanted to even switch currents accounts but since that results in a credit search I'm scared to even do that!

Many Thanks

ACG

2 issues:
1) The credit check being carried out. It will not show the specifics (ie monthly repayments, balance etc) but it could knock your score and get picked up down the line.

2) Did you tell the lender you will be taking out finance? One of the questions lenders ask is along the lines of "are you aware of any material changes to your circumstances in the future?" - if you have said yes, you will have finance and put in the amounts then this will not be an issue, but I suspect you have not?

The other thing is that new builds in my limited experience are notorious for being completed late, meaning you may need to get an offer extended or renewed.

1x14xx

ACG wrote: »

2 issues:
1) The credit check being carried out. It will not show the specifics (ie monthly repayments, balance etc) but it could knock your score and get picked up down the line.

2) Did you tell the lender you will be taking out finance? One of the questions lenders ask is along the lines of "are you aware of any material changes to your circumstances in the future?" - if you have said yes, you will have finance and put in the amounts then this will not be an issue, but I suspect you have not?

The other thing is that new builds in my limited experience are notorious for being completed late, meaning you may need to get an offer extended or renewed.

1) If it knocks my credit score down how low is too much for them? If I recall my score was between 'poor/fair' at the time I applied for my mortgage as I had applied for some 0% credit back 6 months ago but suddenly shot up back to 'good' once the process was completed and we exchanged so I guess they were still fine with this if it was issued. The credit cards were all declared to them.

2) I did not advise my lender I would be taken out new finance because I did not plan to until a few months after completion. I've been told anyway that your better off taking finance, credit cards etc. after completion as doing it while it's ongoing is just asking for trouble. It's just the deal of the vehicle that has made be ask the question.

ACG

There is no credit score as such. Every lender scores you their own way - ignore the scores on the credit reports, they are worthless.

You still plan on taking out finance. Here is an example of how natwest word the question:

Are you aware of any future changes to personal/ financial circumstances, employment, the property or outgoings that will affect your ability to repay this mortgage?

So you should be answering that/any similar question as yes and stating the car finance, you may not have the exact figures but a ballpark.

Simple answer is if you wait until completion, it will have no impact (although you are arguably commiting mortgage fraud by witholding information). If you do it prior to completion, it could.

amnblog

Leave this new car that you would 'like' alone until you have completed your purchase.

You might not affect your mortgage application, but you may, and it's just not worth it.

DCFC79

Buy a cheaper alternative eg second hand, massive savings to be had.

csgohan4

Simple, house or car which is more important???


No new credit applications until completion is the general advice

erin110

Other than the valid points made above. I think what you also need to consider is that unless you are extremely fortunate and you have a very well paid job with lots of disposable income, you may want to consider how feasible it is agreeing to pay x amount per month when you will not be fully aware of your monthly outgoings. Although you may have roughly worked what your bills will be in your first home, there may be some that are unexpected. It would make a lot more sense to wait until you had moved in and spent at least a month or two in the property before jumping at such a commitment. The main reason why mortgage lenders ask if there are any expected changes are to protect you! If interest rates increase so could your mortgage payments so just bare that in mind.