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  • FIRST POST
    • Bakerfrog
    • By Bakerfrog 13th Oct 18, 12:43 PM
    • 4Posts
    • 1Thanks
    Bakerfrog
    New loan with impending mortgage application
    • #1
    • 13th Oct 18, 12:43 PM
    New loan with impending mortgage application 13th Oct 18 at 12:43 PM
    Hi,
    Quick question ....we are applying for our mortgage in January as this is when we will have our deposit. We have a loan with Zopa 15% over 2 years (6000 left to pay) I took it out over a 2 year period with payments around 340 each month. I do over pay each month to a total of 400. The loan is due to be paid by May 2020.
    My question is having to pay out 400 a month will likely affect our affordability in the eyes of the mortgage providers. I have an option to apply for a new loan at a much lower Apr (3.4%) and over a longer period (4years). This would take monthly payments down to 135 a month.
    My concern is whether applying for a new loan, to pay off the other one will have more of an adverse effect of eligibility for a mortgage than paying out more each month which ultimately effects our affordability.....

    Any thoughts ...... Thanks in advance
Page 1
    • Thrugelmir
    • By Thrugelmir 13th Oct 18, 1:24 PM
    • 60,136 Posts
    • 53,467 Thanks
    Thrugelmir
    • #2
    • 13th Oct 18, 1:24 PM
    • #2
    • 13th Oct 18, 1:24 PM
    Why not clear the loan first, using your savings.

    Are you FTB's?
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • csgohan4
    • By csgohan4 13th Oct 18, 4:38 PM
    • 5,053 Posts
    • 3,216 Thanks
    csgohan4
    • #3
    • 13th Oct 18, 4:38 PM
    • #3
    • 13th Oct 18, 4:38 PM
    any debt/loan will impact on affordability, use the calculators from some of the major banks to see what impact they will have

    Covering a loan with another loan is just kicking the can down the road, pay it off if you can
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
    • ACG
    • By ACG 13th Oct 18, 4:39 PM
    • 17,660 Posts
    • 9,458 Thanks
    ACG
    • #4
    • 13th Oct 18, 4:39 PM
    • #4
    • 13th Oct 18, 4:39 PM
    It will affect affordability, but whether that is a problem or not is another matter.

    For example, lets say your combined incomes are 50,000 and you can lend 4.5x income - 250,000. A 135 a month loan may bring that down to say 245,000.

    A 400 a month loan may bring that down to say 210,000.

    If you want a Mortgage of 200,000 it makes no odds.
    If you want a Mortgage of 230,000 then it does.

    (all figures just for example only).
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • Bakerfrog
    • By Bakerfrog 13th Oct 18, 10:53 PM
    • 4 Posts
    • 1 Thanks
    Bakerfrog
    • #5
    • 13th Oct 18, 10:53 PM
    • #5
    • 13th Oct 18, 10:53 PM
    Just to add some clarity.....we need to have our deposit for January and be applying for a mortgage in January as we are currently lodging with a friend. We only have until March and then he is selling his house so we have to move out. Using our deposit money to pay off the loan is not an option.
    My question is what is the best choice ....to affect affordability or eligibility????
    • lewishardwick
    • By lewishardwick 13th Oct 18, 11:21 PM
    • 560 Posts
    • 700 Thanks
    lewishardwick
    • #6
    • 13th Oct 18, 11:21 PM
    • #6
    • 13th Oct 18, 11:21 PM
    Speak to a mortgage broker. They'll be able to advise you how lenders rate outstanding debts.
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