Mortgage application/Dental finance?

Blackbriar_040

Evening all, couldn’t find a definitive answer, so hoping someone can give a bit of advice!

I was planning on making a mortgage application, early Spring/Summer 2024.

Unfortunately, just before Xmas I developed an infection/abscess around a back molar/crown!
My dentist wants to extract the tooth, leaving me with the option of having a substantial gap or having an implant fitted!

If I chose to have the implant fitted, the money would come direct from my mortgage deposit!

The dentist practice also offers a financial plan to spread the overall cost!

Having never used these finance plans before, I am unsure of what kind of impact this would have on my planned mortgage application!

Main Question: 

How much would taking the 0% Finance plan option affect the mortgage application/loan offer?

I currently have no other debt or loans!

All advice appreciated!

Brie

Is it a private plan with the dental practice or something that is an actual credit application?  The first may not show on a credit report but the second definitely would.  

The mortgage application - is this to buy a property for the first time (aka moving from rental) or is it a remortgage? 

Ultimately how much money is both of these "loans" going to cost?  How much will you be expecting to pay out monthly?  Can your income support this?  Obviously a 0% deal is appealing but using some of your deposit may be a better option if the ongoing income might be squeezed having 2 loans at the same time.  

Blackbriar_040

Hi Brie, thanks for the reply!

From what I understand, the practice offers the option to either “Pay as You Go” as you normally have to make several appointments to have the implant fitted, or you spread the overall cost by applying for the finance option through an outside company!

The Finance Company seems to offer the 0% rate on the 12 month option and 9.9% on 24 months or longer!

I am a FTB, from the practice website listing the implant costs, I would be potentially looking at paying £250 at the 0% rate to clear the debt after 12 months or closer to £300 if taken over 24 months!

I have relatively low outgoings, so in theory I could afford the monthly repayments!

ACG

A one off credit check 4-6 months before a mortgage application is unlikely to make a huge difference. 
The monthly repayments will come in to effect for affordability with most lenders if it has over 3-6 months left to run. 

Blackbriar_040

Thanks for the advice ACG!

As I expected It seems either option will affect the application in some way!

E.g

1. Pay off full amount with savings = Smaller deposit available/need to borrow more!

2. Apply for the Finance option, = flags up during affordability check/mortgage offered is reduced!

I feel like it may make more sense to delay the application until I’ve cleared the debt and replaced the some of the savings!

Thanks again!

ACG

Its not really that the mortgage offer will be reduced. If that happens, something has been missed off prior to the application going in. 

There is an affordability calculator that every lender has and they all differ. I remember having a client who had a few grand on credit cards and a small loan. We were trying to maximise the amount he could get and every pound counted. It turned out having £0 or about £1,150 on the credit card made absolutely no difference to how much he could get with Natwest. It might be the same with other lenders, but every lender is difference and so is everyone situation.

If your income is £20k a year then a lot of your income is going to be spent on just the basics. If you are on £120k a year then you are going to have a lot more free cash available. 

On a side note, I put a post on our website a while back but the principle is still the same today as it was then. It has a  list of about 15 lenders. Using the same scenario for all of the lenders (ie joint application, same incomes, commitments, deposit the lending amounts varied from £360k to £480k, thats around 25% difference. 

Speak to a broker when it gets closer to the time if you are struggling with lending amounts. £250 on a loan with repayments of around £20 a month should not make a massive difference, but it could depending on your circumstances. 

Blackbriar_040

I see what you mean!

Your advice has been very helpful! 
I appreciate all the feedback!


Thanks again and Happy New Year!