How Much Do Personal Loans Affect Remortgaging

diond

I'm already 4 years in to a 22 year (£112k) mortgage but am looking to buy a slightly more expensive house (maybe an extra £20k). I am also looking to buy a car with a personal loan of about £4k.

I have no other loans / credit cards or any outstanding debts but am concerned about how this loan might affect my ability to get a larger mortgage? I understand that this is bit of 'how long is a piece of string' type of question, but does anybody have any similar experience / wisdom on this they'd like to share, please? Is it something that I could talk to my current lender about?

Thanks for any advice.

Windofchange

Having loans per se won't impact your ability to get a mortgage / re-mortgage as a general rule of thumb, but it does come down to your affordability. A 4k car loan with an extra 20k of mortgage lending if you earn 100k per year is not going to make the underwriter bat an eyelid. The same figures with a salary of 20k per year might well make them think your monthly outgoings will be too high, and therefore no go. If you're talking 4k for a car, can you get sufficient credit on a 0% purchase credit card after you have got your mortgage through? You will then pay no interest on the loan for however many months, and can then swap to another 0% deal. If things are looking tight financially, I would strongly suggest putting off the car purchase until after the house is sorted. 

K_S

@diond Have a play-around with a couple of lender affordability calculators to get a very general idea of what impact different levels of debt may have on your max potential borrowing. 

https://www.halifax-intermediaries.co.uk/tools_and_calculators/mortgage_affordability_calculator/default.aspx

https://www.nationwide-intermediary.co.uk/calculators/affordability-calculator

It is important to note here that affordability calculations may differ from lender to lender depending on their criteria and policy. And the calculator is only as good as the information that goes in.

Affordability (in most circumstances) is a black and white calculation.

However, background debt may also have some impact on the lender "credit-scoring" (not to be confused with the Experian/ClearScore/CreditKarma one) that they will do for each application to arrive at a decision (usually at the Decision In Principle stage).

Very very roughly speaking, the larger the debt is in relation to your income, the higher it's impact is likely to be. At higher LTVs, the "credit-scoring" requirements may be higher as well.