Applying for car finance during mortgage application - credit rating worrries

MrsGreen0872

Hi

I need to apply for car finance because we sold one of our cars to get 8k funds towards the deposit.

Current situation: We have a mortgage in principle based on our deposit, we have provided proof of the deposit so the car money is in the savings account. We have had an offer accepted on a property.

Now this is done, I need to 'replace' the car by getting a small one on finance. At what point would you do this? After I receive the mortgage offer? I am looking at £170 a month for the car, tops.

I am worried it will wreck my credit rating if I apply for it now, and I've worked so hard to build up.

But I am also worried that once the mortgage shows on the credit rating, that I will have too much liability and won't be able to get a car on finance?

Worst case scenario, I will need to buy a 'banger' with limited cash we have left ...but I'm worried about that too with 9 month old twins, I don't want to be breaking down!

Any help gratefully received.

jennhg88

I would suggest waiting until you have completed.

Murphybear

I was wondering if you have overstretched yourself a bit, having to sell your car to buy a house then borrowing money to buy a car.

I can help with the cars because I have had 2 really good but cheap ones.

How much limited cash do you have? One of the most reliable cars that is small and cheap is the Toyota Yaris.

I bought one 4 years ago, it was 10 years old then. I get it serviced every year and so far it has passed the MOT with flying colours, no problems, no advisories. It is cheap to insure and cheap to run.

The other good little car I have had was a Honda Civic. Similar to above. Which magazine have often said the most reliable small, older cars are Toyota and Honda which is why I bought them, haven’t been disappointed.

Both of these can be picked up for peanuts and if you want to trade it in later for something newer you can sort out your finances.

Others will be able to advise on the practicalities of having loans and mortgages

Claire1257

Honestly, just wait until you've got the keys. My new build has been delayed multiple times and my mortgage offer expired. I had taken out additional credit in between applications and my lender refused to lend all of what I need for my mortgage. I've managed to pay off the credit card now and got a new mortgage offer but it has been so stressful and not worth the hassle!

hazyjo

You may also lose the property and have to buy another (one in around 3 falls through). Then your credit rating really will be stuffed.


£170 a month is a hell of a lot to find every single month. I couldn't.


Do as suggested above. Buy an older car without a loan.

Cakeguts

Don't buy cars on loans save up and buy a cheap second hand one. Now that you have a house and a mortgage you cannot afford car loans because you need a lot of saving to a pay for repairs to your house.

MrsGreen0872

Yes I probably need to look at buying a cheap runaround until we have the keys.

I will hopefully be better off anyway as I am currently paying £920pcm rent and the mortgage we will hopefully be paying is £775... so it will give me a little to spend on a reliable car. It's just been so hard to save up a deposit while paying nearly a grand a month rent AND having the added bonus of twins in childcare! SO glad we are finally getting there anyway, it's been a bumpy road financially for us.

thank you everyone

hazyjo

MrsGreen0872 wrote: »

Yes I probably need to look at buying a cheap runaround until we have the keys.

I will hopefully be better off anyway as I am currently paying £920pcm rent and the mortgage we will hopefully be paying is £775... so it will give me a little to spend on a reliable car. It's just been so hard to save up a deposit while paying nearly a grand a month rent AND having the added bonus of twins in childcare! SO glad we are finally getting there anyway, it's been a bumpy road financially for us.

thank you everyone

As Cakeguts says, you will now need to pay for repairs and updates to your home.

Not including the thousands I have spend on decorating and improvements to the house, it the nearly-2 years I have been there I have had to replace the washing machine, get someone in about the boiler, just had another bod in to service it and fit a part, change a couple of rads, change the kitchen tap, sort out the water pressure, sort the 2 loos - one of which had a pathetic flush, the other you had to lift the 'lid' every time you wanted to flush it (cost nearly a grand for the latest visit). Also had a triple kitchen unit nearly fall off, some drainage issues, a chunk of plaster fell off the front of the house, erm, probably 101 other things I've forgotten. I still have a broken drain issue, and possibly a leak or water damage in the kitchen (ridiculously creaky floorboards in there), and the washing machine has so many issues we think it'll need replacing again.

I doubt very much that with twins too, you will have an extra £145 a month every month!!!!

At least try putting £170 away for a year (EVERY MONTH. NO EXCUSES!). If you manage it easily - great! You'll have a couple of grand to put towards a new car. If not, you'll know it was a lucky escape (and wishful thinking).

Cakeguts

MrsGreen0872 wrote: »

Yes I probably need to look at buying a cheap runaround until we have the keys.

I will hopefully be better off anyway as I am currently paying £920pcm rent and the mortgage we will hopefully be paying is £775... so it will give me a little to spend on a reliable car. It's just been so hard to save up a deposit while paying nearly a grand a month rent AND having the added bonus of twins in childcare! SO glad we are finally getting there anyway, it's been a bumpy road financially for us.

thank you everyone

Owning a house is more expensive than renting. You pay £920pcm for rent but included in that are all repairs to the property, and buildings insurance. You are now responsible for all the repairs to your house. You need to save the difference between your mortgage and your rent to pay for the repairs that you now have to do. A new boiler could easily cost £1000 and if you get any water leaks you pay for those. House maintenance is constant.



The fact that you had to sell a car to get the deposit suggests that you don't save money on a regular basis. What are you going to do if the mortgage interests rise and the mortgage costs more each month? If you own a house you cannot spend every penny that you earn. You have to have enough in savings now to pay the mortgage if you lose your job or become ill and cannot work. There are no benefits that pay mortgages. You might get the interest paid for a short time. If you do not pay the mortgage you will lose the house.



It would be a good idea to have savings that will pay the mortgage for 6 months.



If you wanted to save money on housing costs you should have looked for a cheaper rental property. Owning a property is much more expensive than renting one.



Welcome to the club of home ownership and second car owners. The time when you can take out car loans again is when you have finished pay your mortgage and you own the house outright without any loans secured on it.

TBagpuss

I agree with other posters. Definitely don't apply for a car loan until you have completed.
If you do,then the risk is that if your lenderdoes a fresh credit check, they could withraw or reduce your mortgage offer. e.g. if you borrow £6K for a car, you may find that you can borrow £6K less on your mortgage.
Or whatever amont reduces your monhtly mortage paymetns by £170.

Lenders can and do re-run credit checks at any point up to when the purchase completes.
When I sold my hpuse, this happened to the buyer. He had gone out and bought a load of furniture on credit cards and when they ran his credit check they pulled the mortgage offer and the sale fell through. Which was annoying for me, but presumably much worse for him!


Buy a cheap runaround, put a minimum of £170 into savings every month for a year and then review the position.

ethank

Is this a need or a want.....?

Best off not doing anything until you have completed