Will a finance vehicle affect us getting a mortgage?

CreditCardJunkie

We've two cars on finance which are almost £500 per month in total. It reduced the amount we could borrow by 60k!

Noneforit999

As said above, yes it will affect how much a lender is willing to lend but it really depends on your salaries vs what you want to borrow.

If you both earn £50k a year each and want to borrow £170k then a £250 car payment is not going to make a difference to affordability based on what you earn vs what you want to borrow.

However if the lender works on 4x salary and you are around this figure without the van then it may reduce the lending by below what you need. Plenty of people get mortgages with one or even multiple car finance payments but it entirely depends on what they need to borrow vs their earnings.

We recently got a mortgage and the lender stipulated we pay off both the car loans we had as part of the mortgage offer, i.e. the offer was conditional on both loans being repaid before we took out the mortgage. I assumed they would ask to see proof before releasing the funds so I duly paid them off......they never asked to see proof of anything so I could have let them run at 2.9% each and simply stuck the money in a 4.5% fixed savings (at the time) and been better off but never mind. 

kingstreet

Put the details in here, with and without the van payments and you will be able to see the difference;-

https://www.halifax-intermediaries.co.uk/tools-calculators/mortgage-affordability-calculator.html

lookstraightahead

Yes because you have more outgoings.

pinkteapot

Any chance he can keep his van going until after you've bought the house, or will it be too expensive to fix?

As others have said, it may significantly reduce the amount you can borrow, but you need to play with calculators or speak to a broker to find out by how much exactly. But you could take out finance the day after you've completed the purchase and that would be fine! 

Grumpy_chap

hannahsim22 said:

Me and my partner are interested in buying a house in the next 12 months.
my partners van is on its way out and needs a new one.
The only real option is to get one on finance and after 5 years he will own it. 

We are hoping to buy something for around 170,000 to 190,000 with a 5% deposit but 10% if possible depending on how much we can save between then and now on top of what we already have. 

Will this affect us being accepted for a mortgage and how much is it expected to affect us if it does? 

Thanks you. 

You really don't want to be taking on any more credit or making large cash purchases (reducing available deposit) before you have bought the house and moved in for long enough to have a true knowledge of your future budgets (rather than expectation).

Buying a house and running a house will almost certainly end up with a real budget that varies from whatever your expectation might be.

Any movement in credit or available savings will potentially have an impact on what mortgage you can get.

What is wrong with the van meaning it is "on the way out"? 
Can the van be kept operational for another year until after the house purchase is complete?

jonnydeppiwish!

Is the van for business use? Are they self employed?  Can they offset the cost against tax etc? Sorry I have no experience of this situation but had these random thoughts 😆