Having a loan affect taking out a mortgage

JD_22

Hello, I recently took out a loan to clear up a few debts. However I have savings in a LISA for a mortgage. Would I still be able to apply/enquire for a mortgage although I have this loan. 

impoverishedtraveller

You can apply for whatever you want.
I suspect your real question is will you be accepted?

The answer to that is maybe… maybe not.

The success of an application will be dependant on your individual circumstances, so to get an answer better than the above, you really need to speak to a mortgage broker.

JD_22

Thank you for the response 

[Deleted User]

Any debt you have will be taken into account when looking at mortgage borrowing and how much they will give you

Ebe_Scrooge

Yes, as per the previous reply - the loan as such may or may not affect your chances.

When you apply for a mortgage, they will look at many factors, but a key one will be affordability - how much are you looking to borrow, what commitments do you already have, will you be able to afford the mortgage repayments (in addition to any existing loans/credit cards/whatever) without stretching yourself too far.

So, when you submit your mortgage application, they'll look at your finances and give you a yes or no answer (slightly over-simplified, but that's the gist of it).

What you do need to be careful about is taking out any new lines of credit in the run-up to the purchase.  Say you apply for a mortgage, get accepted in principle - this acceptance will be based on your current credit status.  If you then take out a new loan (in anticipation of buying new furniture or whatever it may be), they'll usually do a final check before completing the mortgage process.  They'll now see your new loan (or credit card application etc.) and may decide that you no longer meet their lending requirements, and withdraw the offer.  Which leaves you a bit snookered.

So as far as it goes, don't worry about the loan itself.  But don't apply for any further credit until everything is done and dusted.

longjohnjohnson

Ebe_Scrooge said:

Yes, as per the previous reply - the loan as such may or may not affect your chances.

When you apply for a mortgage, they will look at many factors, but a key one will be affordability - how much are you looking to borrow, what commitments do you already have, will you be able to afford the mortgage repayments (in addition to any existing loans/credit cards/whatever) without stretching yourself too far.

So, when you submit your mortgage application, they'll look at your finances and give you a yes or no answer (slightly over-simplified, but that's the gist of it).

What you do need to be careful about is taking out any new lines of credit in the run-up to the purchase.  Say you apply for a mortgage, get accepted in principle - this acceptance will be based on your current credit status.  If you then take out a new loan (in anticipation of buying new furniture or whatever it may be), they'll usually do a final check before completing the mortgage process.  They'll now see your new loan (or credit card application etc.) and may decide that you no longer meet their lending requirements, and withdraw the offer.  Which leaves you a bit snookered.

So as far as it goes, don't worry about the loan itself.  But don't apply for any further credit until everything is done and dusted.

The loan is going to be a massive negative, especially right before a mortgage application.  Typically mortgage providers will times a loan repayment by 3 when it comes to your affordability.

Plus, the OP hasn't cleared up any debts by taking out a loan, they've just shifted it into another vessel.