Could PCP car loan affect a remortgage application?

gowie45

My wife and I want to remortgage our £250k house to borrow another £10k for home improvements in March / April

Could our chances of being accepted be affected in any way by trading in my car to move to a new four year car PCP deal now?

I currently have two years of a car loan remaining costing £340 a month.

The proposed new PCP would see my car repayments REDUCE by £30 a month - but increase my overall debt level and increase the lending period to four years.

My credit score is excellent.

Could anyone in the know explain if the change of car finance might impact our remortgage chances at all?

flashg67

Last time I went for a mortgage, they took into account the total debt - I had a PCP and credit card debts, rather than the monthly payments (Lloyds) and took the total debt from whatever they'd lend me.

System

Yes absolutely it will. It can affect the total amount you are offered, the interest rate and whether or not you'll pass any affordability tests based on your debt:income ratio.

Your credit score is meaningless as you'll find if you go to the Credit File & Ratings board and see the number of posts with people with 999 from Equifax being refused loans and mortgages.

gowie45

Thanks. But the point is that I would be replacing car finance currently running at £340 a month with car finance costing £310 a month.

System

gowie45 wrote: »

Thanks. But the point is that I would be replacing car finance currently running at £340 a month with car finance costing £310 a month.

Indeed you would but the total amount of debt you would have in proportion to your income would be increasing considerably and that could put a cap on what you want to borrow or make it more expensive.

jonesMUFCforever

I agree with all other posts - it will affect any mortgage application.
Affordability and total debt will play a big part.

What was fine say 3 years ago might not be so now or the near future.
Lenders might (or might not) take a more negative view of your personal financial position.

gowie45

My confusion is this.

What would be more important to Nationwide?

My *monthly* outgoings to income affordability ratio? (42%)

Or my *overall* debt to income ratio (currently 30% with current car loan, but higher with new car PCP)?

Is monthly outgoings and incomings the key factor?

Or your overall debt to income?

Or both?!

tonycottee

gowie45 wrote: »

My confusion is this.

What would be more important to Nationwide?

My *monthly* outgoings to income affordability ratio? (42%)

Or my *overall* debt to income ratio (currently 30% with current car loan, but higher with new car PCP)?

Is monthly outgoings and incomings the key factor?

Or your overall debt to income?

Or both?!

I disagree with the majority here. When I applied for a remortgage last month, they seemed more concerned with the monthly outgoings.
I would ask over on the mortgage board.

gowie45

Tony, that’s the impression I get.

Any personal experiences anyone has of applying with Nationwide welcome.

Xbigman

When you have a FTF or phone interview with a rep they might appear to be more interested in one figure or the other but this is often a red herring. Ultimately they are entering figures into a computer and the computer makes the decision based on both criteria. It might be that you are tighter on one than the other but you need to be concerned about both. Only if you fail on one criteria and pass on the other should you consider changing anything.




Darren

fiisch

Recently remortgaged with a broker and it wasn't the total debt outstanding at all - it was the monthly cost which they took into account e.g.:


Earnings of £110k per year
£10k per year car payments


110 - 10 = 100 x 4.5 = total available lending of £450k


The amount of debt was irrelevant when we were re-mortgaging (and indeed when we bought a house). We have gone with Halifax on each occasion, but via a broker and other lenders were considered.


We have 2x cars on PCP - the outstanding debt including the balloon payments are north of £50k, so if total debt was a factor we'd have just about been able to get a mortgage on a static caravan in North Wales.....