Taking out Car Finance before Mortgage application

MAbdi

Hi,

my car broke down last week and it is uneconomical to repair it yet again. I wanted to buy another car on finance. However, as I was planning to apply for a mortgage later this month or early next month, I am not sure if it will affect my mortgage application if I take out another loan so close to a mortgage application.

Would this harm my chances of getting approved or would the loan simply be deducted from my affordability?

I don't have any other loans apart from student loans and I have a relatively high credit card utilisation (around 28% of my pre-tax income).

Any advice appreciated.

Dandytf

Don't concern yourself.

I took a 7.5k loan a few months ahead of mtg application.

If you have income to cover mtg,car finance,bills etc it shouldn't cause any concerns.

MAbdi

Dandytf wrote: »

Don't concern yourself.

I took a 7.5k loan a few months ahead of mtg application.

If you have income to cover mtg,car finance,bills etc it shouldn't cause any concerns.

Thanks. How many months was it between taking out your loan and your mortgage application? Mine would be only 1-2 months apart and I've read elsewhere that one should not take out any other loans prior to mortgage application...

Lilla_D

Please do concern yourself.

Every case is different and your income, outgoings, age, the desired mortgage amount, etc. all have to be taken into account when such a decision is made. It's dangerous telling someone not to worry about taking out a loan without knowing their full situation. The right advice is to speak to a broker, who can then consider all aspects and advise you based on your individual circumstances.

Having a few months between taking out a loan and having 1-2 months is completely different, as the latter means a credit search within the last 3 months, which can influence a mortgage application. Please go and speak to a broker before making a decision.

Dandytf

MAbdi wrote: »

Thanks. How many months was it between taking out your loan and your mortgage application? Mine would be only 1-2 months apart and I've read elsewhere that one should not take out any other loans prior to mortgage application...

I'll be honest.
My previous flat took what felt like a lifetime to sell.
Though I did arrange an mortgage in principal 6 months in advance of finally moving home.

I'll need to review the laon dates to give an accurate answer.

Though what I know from memory is my mtg was Agreen August 2009.

I'll re post my loan date later today.

In theory though your car finance shouldn't have an impact on your mtg orther than affordibility.

Dandytf

Found my loan via checkmyfile.

I remember now, it was a consolidatiobn loan with 3 months of not making any payments as part of the aggreement 7 something percent apr e.g. Applied Fab 2009 no payments until April that year.

If I answer your question Feb-Aug 7 motnths before mtg went through though I had a mtg AIP April of that year.

I only offer my opinon, I've never used a broker.

As Imentioned previously there are other via mse who can advise you.

If Iremeber correctly my loan didn't affect my mtg application though it may have reduced the amount of mtg I could get at that time-though I could be wrong.