Personal Loan before a Mortgage

OnlineAlex

Hello,

I’m currently looking to buy my first property as a sole applicant and all is going surprisingly well. The only thing that is impacting on what I can borrow is a personal loan I have for my car, which, due to the monthly repayments, is lowering my buying power by about £15,000. I have held this for over 2 years now and have a remaining balance of £7800 at a cost of £202pm for remaining 2 ½ years on the term.

My mortgage advisor has suggested I take out loan for exactly the same value (£7800) but over a longer term (5 years) to bring the monthly repayments down to approximately £140pm, which would allow me to borrow the maximum amount my salary will allow on a mortgage. This is with the view to shorten the loan term once I’m on the property ladder.

My question is, if I were to take out a loan now would it damage my chances for a an immanent mortgage application? From what I can tell from researching online, it might make an application difficult for the 6 weeks after taking the loan, however, I won’t be in a position to make any offers until the end of November so that wouldn't be a problem. Likewise, I am not looking to borrow more credit than I currently have as one loan would clear another but just over a longer term. Unfortunately, I am not in a position to clear the loan before application.

Any advice on this would be great. I’m happy to give any more information if needed.

Thanks in advance,
Alex

[Deleted User]

Better to post this on the mortgages board, where they will know how the various lenders view different terms and consolidation.

BoGoF

Poor advice so close to a mortgage application I would say. You could end up in a position where both loans are showing on your credit report for a period of time.

foxy-stoat

What did you spend the £10,000 on? Was it an expensive car? Could you not sell it and down value for a while and make your mortgage chances a lot better?