Cars and mortgages.....

goodwithsaving

Morning. I have a feeling I know the answer to this one but....

My car is starting to see all sorts of problems and is making my back exceptionally painful as it provides no lumbar support and I'm having to do a high mileage currently (will reduce towards Christmas). I would like to change it for something larger, more robust and something which makes me feel safer and more comfortable on long drives and the daily commute.

However, I am going to move (port my current mortgage) later in the year.

I can afford to pay cash for the car but don't want to leave my reserves low so was going to take out a max £3000 loan to cover it. When I come to the mortgage, I can pay it off completely before the mortgage goes through which will enable me to borrow the maximum I can.

Would taking out a small loan at this stage have an impact on lending? Lenders don't use scores, but use the files and file history etc.

I don't want an old banger so please do not suggest cheap cars!

Richey_

Your proposal makes no sense. Why pay borrow money when you do not need to. Unless of course the interest on your savings is higher than the interest on the loan?

If I was in your shoes I would be taking it from my savings and then repaying it back each month with the money you would be using to service the loan.

Why give money away to a loan company rather than put this extra money towards your mortgage savings?

goodwithsaving

I do get that, but I can't save much at the moment (£400/month) due to paying a rent and mortgage. Pulling the money out of savings leaves me with just a few thousand in the bank which would ordinarily be okay, if not for needing to pay upfront for removals etc when I do eventually move.

Thrugelmir

goodwithsaving wrote: »

I don't want an old banger so please do not suggest cheap cars!

Cheap does not equate to being an old banger. Focus on the mileage and service history.

Richey_

But when you then have to add loan repayments to your monthly outgoings, you will save less. At least by using savings you will not have to pay interest on the load, money that can go towards the mortgage, moving costs etc

goodwithsaving

That's true. I'm quite annoyed with myself for not remembering that, I'm normally switched on. Thank you for talking sense into me Richey!

newbieFTB

When I was playing around with affordability calculators, £100 of commited spending took around £15,000 off what the lender was prepared to lend so even a small loan would impact on your total permitted mortgage amount.

goodwithsaving

newbieFTB wrote: »

When I was playing around with affordability calculators, £100 of commited spending took around £15,000 off what the lender was prepared to lend so even a small loan would impact on your total permitted mortgage amount.

That's right, 10k in my case. Although I'd pay it off before completion so I'd still be able to borrow the maximum amount. (I checked with my lender)