New loan with lower repayments will help the mortgage application?

Catarina_Santos

Hiya,

A few years ago I took out a loan to do a Masters.
I currently pay around £250 a month on a 6% interest rate.
I was looking into taking a new loan, at a better interest rate, and settle my existing one for a lower monthly repayment.

The catch is that I'm looking into purchasing my first home in the next few months, and I'm worried that the application for the new loan will have a negative effect on the mortgage application.

Should I take the new loan as soon as possible, or wait for the house purchase to go through?
Any advise or recommendation is appreciated.

Thank you

woofdonkey

Your lender might ignore the repayment amount and use their own estimate.

E.g. they might just assume you repay 5% monthly, even if you repay much less.

So shuffling the debt may be pointless in that respect.

I would personally avoid any searches/ new credit within such a short time if a mortgage application, particularly if it can reasonably wait until afterwards.