Would a mortgage broker be able to exclude a 0% loan from my affordability?

lolcaz · 15 September 2018 at 4:34PM

I have 7 payments of £350 left on a 0% loan, for which I have the cash in my accounts to pay if necessary. Obviously being 0%, there's no reason for me to want to pay it off early, except for the fact that it severely impacts my mortgage affordability. I was playing around with a calculator and the affordability drops down about £20-25k if I keep the loan, which is understandable, but it'd be paid off mere months into the mortgage term anyway.
Given that I'll have fewer than 6 months of payments and cash on hand to pay it, would a mortgage broker be able to disregard it for the affordability checks?
I am seeing some flats and a mortgage advisor next weekend, so I can ask them anyway, but I wanted to see if it's even a possibility. If it's not, I'll just pay it off before the mortgage but would prefer not to!

minimike2 · 15 September 2018 at 4:51PM

At 7 months with that balance, very unlikely that it would be excluded with any lenders which automate this part of the decision. Maybe with a lender that manually assesses, but then you tend to pay higher rates.

Just pay it off IMO. Looking at the big picture, there is virtually no point in not paying it off as any interest you would get on that money in savings in that time is hardly anything.

ACG · 15 September 2018 at 5:00PM

With 7 months unlikely, at 6 months probably yes.

lolcaz · 15 September 2018 at 5:16PM

Thanks. I will have 6 months left by the 1st of October, and likely fewer by the time it'll happen, so that's good to know. I will see what the mortgage advisor has to say next weekend! Obviously I would pay it off beforehand if it has a significant impact, but just wanted to find out if it's an option not to pay it off.

kingstreet · 15 September 2018 at 6:39PM

Your commitment will be to repay it on or before completion, so that might be less than three months before it expires anyway.

Lotak · 17 September 2018 at 9:23AM

lolcaz wrote: »

I have 7 payments of £350 left on a 0% loan, for which I have the cash in my accounts to pay if necessary. Obviously being 0%, there's no reason for me to want to pay it off early, except for the fact that it severely impacts my mortgage affordability. I was playing around with a calculator and the affordability drops down about £20-25k if I keep the loan, which is understandable, but it'd be paid off mere months into the mortgage term anyway.
Given that I'll have fewer than 6 months of payments and cash on hand to pay it, would a mortgage broker be able to disregard it for the affordability checks?
I am seeing some flats and a mortgage advisor next weekend, so I can ask them anyway, but I wanted to see if it's even a possibility. If it's not, I'll just pay it off before the mortgage but would prefer not to!

You might be alright.
If it is critical for affordability that they have to include it and that it means you fail the stress test, then ask them to redeem it (i.e. borrow an additional [say] £2,100) and pay off the balance as part of the mortgage (i.e. overpay by the amount you currently pay).
Obviously you'll be paying a small amount of interest on it, but it's a lot better than not being able to get a mortgage!

MortgageAdviserTorquay · 18 September 2018 at 10:30PM

Some lenders will ignore the payment if 4-6 months are left to be paid which helps with affordability

Would a mortgage broker be able to exclude a 0% loan from my affordability?

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