Taking out a loan to pay finance? Good for mortgage?

J_John96

I’m on here for Advice. Don’t be a smart !!! and try make me feel stupid. If you’ve no advice or no help then don’t respond at all. Thanks.

AdrianC

J_John96 wrote: »

I’m on here for Advice. Don’t be a smart !!! and try make me feel stupid. If you’ve no advice or no help then don’t respond at all. Thanks.

Quoting helps us know who you're replying to.

If that's to GDB, then you surely have to admit that spending the thick end of a grand on tick for a bauble at a time when you want your finances to look cleaner is... counterproductive.

If you're paying £90/mo for this £800 phone over anything more than 9 months (£810 paid back, £900 after 10mo, £990 after 11, £1080 after 12 - PLEASE tell me it isn't longer... Or is that £90/mo including your contract?), then you're being utterly gouged, and have proven my point - which I suspect is also something you don't want to hear.

If you don't even begin to understand your debt, to the point that you don't know what's debt and what's not, how much interest, and how long the term, then how can we help?

Nebulous2

GDB2222 wrote: »

Did I read that correctly? The OP wants to buy a house, so his preparation for that is to buy a phone costing £90 a month?

I’d be inclined to cut him / her a bit of slack. Lots of us have lusted over an expensive car when we were young and paid more than we should have. I had a Volkswagen scirocco at 19 and pretty much don’t regret it. Although I have an £8 a month phone contract some of my colleagues are paying over £60, so £90 wouldn’t be impossible.

What they appear to have done is acquire an expensive car and an expensive phone and then decide they want a house. Trying to reduce costs to buy is what they need to do now. Starting where they are that is a sensible idea. What isn’t so good is the route they have chosen to achieve it. Stretching payments over a longer time period just kicks the problem down the road, it doesn’t solve it. Depending on income, deposit and affordability calculations it may well be that the car and a house simply aren’t compatible it has to be one or the other. We won’t know that without more data though, such as interest rates, income and proposed price of the house.

csgohan4

J_John96 wrote: »

I’m on here for Advice. Don’t be a smart !!! and try make me feel stupid. If you’ve no advice or no help then don’t respond at all. Thanks.

OP we're not here to tell you what you want to hear.

Reality is that lenders look at debt and this will afect what you can borrow and is a sign of how buyer's handle their money.

OP you need to understand that reducing your monthly payments but extending the loan duration is false economy and indeed will incur more costs in the long run. Hence will affect your debt level more

IF your saddled with debt, that is a sign of poor money management.

This is a money saving website, do you need a 800+ pound phone??

Which is more important house or phone/Expensive Car?

No shame in having a 1k old banger, I've had a few and saved alot

GDB2222

J_John96 wrote: »

I’m on here for Advice. Don’t be a smart !!! and try make me feel stupid. If you’ve no advice or no help then don’t respond at all. Thanks.

That was advice. If you want to improve your chances of getting a large mortgage, fundamentally improve your finances. Taking out a different loan is just rearranging the deckchairs on the Titanic.

In any case, you seemed to be interested in the monthly payments, rather than the APR. That is missing the fundamental point.

G_M

J_John96 wrote: »

I’m on here for Advice. Don’t be a smart !!! and try make me feel stupid. If you’ve no advice or no help then don’t respond at all. Thanks.

You want advice. But when you receive it you not only reject it but attack those who give it.

If you want to avoid feeling stupid, take on board the sensible points being made to help you.

* you want to buy a property, so improve your financial understanding
* and improve your financial standing, by reducing debt, not extending it
* and start saving by cutting costs. Have you actually bought this phone? If not yet, don't. If yes, are you tied in contractually? Have you checked the contract to see if you can cancel?
* checking respective interest rates is fudamental to comparing debts - trying to move debt around without this basic information is.... sorry..... just stupid.

Finally - this is a property forum. You need the debt forum here.

amandacat

If it was me I’d do what the OP suggested. There will be less interest paid and the monthly payments are less.

Buying a house is an investment, will save you rent and assuming prices continue to grow, you’re better off buying sooner rather than later. I got on the housing ladder 10 years ago and had debt, if I had waited to be clear of debt I’d still be renting now and wouldn’t have built up the equity I have in my property.

Having a loan of 8k is no different than owing on car finance now so your overall debt is the same. During your mortgage application it will be taken into account but more so the monthly payment. Put the existing details and then the details if you had the loan through a mortgage calculator to check you can borrow what you need.

Cakeguts

The problem is that you can't borrow more than you can afford to pay back. The more borrowing you have for phones and cars the less the bank will lend you in the form of a mortgage because with the amount you are already borrowing you are now high risk for them. They don't want to lend money to people to buy houses who are high risk because they don't want to have to repossess the property if you can't pay the mortgage. From their point of view you are high risk of not being able to pay the mortgage because you keep borrowing money to buy things that you can't actually afford.



For example if you had been good at saving money you would not have taken out finance to buy a car and you would have bought a phone not got one by taking out a loan.



When you own a property you have to be very good at saving because if you lose your job you have to use savings to pay the mortgage or you will lose the property. Banks don't want to lend to people like this because it is bad for their business.



If you are really thinking of getting a mortgage in a few years time what you need to do is to pay off the car and the phone and then start saving for the deposit. If you can show the bank that you don't take out car loans to pay for cars that you can't afford and loans for very expensive phones that you can't afford you will be able to show that you can afford to pay the mortgage loan. At the moment all you are doing is showing that you are not good at saving money and they don't want to lend to people like that. It makes no difference if the loan is from Tesco or anywhere else it is the fact that you have the loan that is the problem.



If you already have savings for the deposit then use those to pay off the loans and save up again for the deposit. Do not take out any other loans for things that you want but can't afford. Pay off the credit card if there is debt on there. At the moment you are a bad risk.