Additional borrowing application / affordability

thriftypatos

Hi everyone,

We are going to be applying for additional borrowing with our mortgage bank later this year, to help finance extensive building work on our house (extensions and loft conversion). 

We are also about to sign up for a new car finance deal (a PCP) - but before doing so, I want to get an idea of whether the car finance is likely to have any significant impact on the bank's appetite to lend us further money on the house. I expect it will come down to affordability criteria, and we are fortunate that we both have good salaries and stable jobs. But would be very grateful to hear thoughts about whether applying for the car deal before we apply for the additional mortgage funds has the potential to screw our mortgage application! 

Basic numbers as follows.

House value (according to bank) - £905k
Current mortgage - £580k
Additional borrowing that we will be requesting for the house - £200k
Current car outgoings (PCH lease) - £340/month
New car deal (PCP) - £680/month (total amount of credit £58k)
Joint income £250k (£140k + £110k)
No other major outgoings apart from nursery fees £1650/month

Not sure if that level of detail is necessary but hopefully paints a reasonable picture of where we are at. Essentially I am just trying to work out whether taking out the expensive car PCP now is suicide for the additional mortgage application that we'll be making later in the year - will the bank:

(a) see that our monthly outgoings are only increasing by £340 (which is not an issue for affordability at all); or
(b) see a new debt against our name for the full PCP credit amount which is £58k, and take a dim view of this? Obviously with a PCP you're not obliged to pay the balloon, which is c.£37k...

Many thanks in advance!

kingstreet

Run these through your lender's affordability calculator for the total borrowings as if it was a new mortgage. It'll give you some idea of where you stand.