Financial dilema

Jamie_92

Hello, I'm in a bit of a financial dilema, my partner and I are preparing to buy our own house together and have a deposit large enough to start looking for mortgages, plus the additional extras needed for fees etc, but i have just passed my driving test and need to buy a car and dont know what road to go down. I have an excellent credit score of 976 of out 999 so - Should I Use some of our savings which could leave us short for our deposit? Apply for a car on finance or PCP which could affect our mortgage application? or apply for a loan or 0% balance transfer to save on interest being repaid compaired to car finance? Which could also affect a mortgage apllocation.
In short how much does applying for credit affect a mortgage application?

goodwithsaving

I had to change my car not long ago knowing I had a mortgage application coming up.
I paid for the car in cash. Reason being, it can have quite an impact on what you can borrow. Sure, I don't have as much money as I'd like at the moment but at least I can borrow what I need for a house which is far more important than a car. Do you need a car rightaway or can it wait? I was able to afford to pay for a new car outright and still have deposit money though.
Credit score doesn't come into it really, it's more about your committed expenditure, money management, reliability of income etc. They queried my payment for the car but it was fine because it wasn't an ongoing payment.

KxMx

I'm no expert in the mortgage market.

However, the numbered credit score is meaningless, all agencies and lenders use different criteria, what the likes of Experian etc do is make up scores in order to try and sell the consumer products.

lincroft1710

"Just passed driving test" and "need to buy a car" are actually non sequiturs. If you need a car look for something older, cheap and basic (not a Corsa). As a new driver you're likely to have very high insurance premiums plus are more likely to have the odd minor scrape or scratch on the paintwork.

Jamie_92

Thanks for your advise, the car can and probably will have to wait as a house is more important.

ST1991

Agree with advice above.
We've always had an old banger, and put off getting a new car until the house went through.
Unfortunately we've depleted most of our extra savings in doing the house up, but we are now in a position where we got a fairly new car on finance (instead of cash) and it is sooo nice to have a new shiny car for once (i feel like a grown up).

Would recommend waiting, as you may have a few dings in your first car.
Once you have bought a house, you could then apply for finance/credit on a car once you know what you can afford.

spadoosh

Firstly you dont need a car because you have a licence. I have a licence but i do not need a car. Secondly, you can buy a car from about £200+. Thats an option that normally doesnt require borrowing. Third thing is cars are damn expensive.

A new car on finace ~£150+ per month.
Insurance for said car (average insurance policy ~£500 per year, you will not be average, lets double it.) £1000 per annum.
Annual MOT £40
Service £100

So thats £250 per month and the car hasnt left the drive. Thats half the cost of my mortgage.

Still need a car?


If thats not put you off, i had £100 on a credit card i had forgotten about (min payment) and that was enough to raise questions during my mortgage application.

At the very least i would hold off until you have the house. With a property you tend to find lenders will chuck money at you. I went from not being able to get more than £500 overdraft to being offered a £10k credit card in a little over 12 months, the change in circumstance was home ownership.

Just to clarify, do not buy a car! If you really have to research bangernomics.

AnotherJoe

Can you clarify exactly what happened the day after your driving test that made you unable to use whatever transport you were using the day before the test?

It is though some time since i took my test (ahem..... ) so perhaps the rules have changed and its now a legal requirement to purchase a car immediately after passing ?

Jamie_92

Spadoosh - I agree i do not "need" to buy a car, that was poorly worded on my part but a car certainly would help my circumstances, thank you your advise is very helpful as is ST199's and has clarified the right path to choose.

AimHigh

spadoosh wrote: »

Firstly you dont need a car because you have a licence. I have a licence but i do not need a car. Secondly, you can buy a car from about £200+. Thats an option that normally doesnt require borrowing. Third thing is cars are damn expensive.

A new car on finace ~£150+ per month.
Insurance for said car (average insurance policy ~£500 per year, you will not be average, lets double it.) £1000 per annum.
Annual MOT £40
Service £100

So thats £250 per month and the car hasnt left the drive. Thats half the cost of my mortgage.

Still need a car?


If thats not put you off, i had £100 on a credit card i had forgotten about (min payment) and that was enough to raise questions during my mortgage application.

At the very least i would hold off until you have the house. With a property you tend to find lenders will chuck money at you. I went from not being able to get more than £500 overdraft to being offered a £10k credit card in a little over 12 months, the change in circumstance was home ownership.

Just to clarify, do not buy a car! If you really have to research bangernomics.

I completely agree with this. I bought a new car on finance and although I've loved having it, I deeply regret the amount of money spent on it.

Although it's a minor point - worth noting that a new car will not need an MOT for the first 3 years and often service plans are included in the cost of the finance (depending on the deal - it's of course extra).

Either way, the advice given here is exactly what I would advise - if you need/want a car then buy a cheaper car with cash. A roof over your head is far more important

kingstreet

You are advised to try to avoid applications for new credit in the six months run up to a mortgage application and definitely not to do so between application and completion.

A search being logged on your credit file can do damage if your application was a bit weak in the first place.

Strong application - low LTV, three years plus at current address and employment, low multiple of income required.

Weak application - high LTV, multiple addresses, short employment history, borrowing towards maximum.