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Two loans at once

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  • 04-03-2014 1:54pm
    #1
    SparrowHawk
    Registered Users Posts: 386 ✭✭


    Hi All,

    Myself and my wife are currently in the process of applying for mortgage approval - all the financial documents are in, and the bank is processing at the moment. Booking deposit paid etc.

    However, now the car has started coughing and spluttering, (over 10 years old) and we're thinking of purchasing a new car.

    When we completed all the financial stuff, obviously there was no car purchase on the books - my question is - can we wait for the mortgage approval to be granted and then apply for a car loan with the dealership finance company without negatively impacting our mortgage application? We have sufficient finance to fund both loans, but do not want to delay the mortgage process, by having to reapply.

    Any advice?

    Thanks,

    SH


Comments

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    #2
    dobsdave
    Closed Accounts Posts: 1,814 ✭✭✭dobsdave


    Your question seems to contradict itself.


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    #3
    coylemj
    Registered Users Posts: 25,346 ✭✭✭✭coylemj


    SparrowHawk wrote: »
    can we wait for the mortgage approval to be granted and then apply for a car loan with the dealership finance company without negatively impacting our mortgage application?

    Yes but I'd wait for the mortgage to be finalised i.e. you actually complete the sale/purchase, then go and borrow money for the car but ask your bank for the money - a finance company will charge you way over the odds and the car salesman will get a big commission which is money straight out of your pocket.

    If you own a house you shouldn't be borrowing money from a finance company. The mortgage agreement you sign for with the bank probably says that the house will act as security for all money you owe that bank which means the car loan would be secured on the house which in turns means that the bank should have no problem lending you the money as long as the loan to value (LTV) doesn't cross any important threshold and you can show that you can afford the additional monthly repayments.


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    #4
    SparrowHawk
    Registered Users Posts: 386 ✭✭SparrowHawk


    dobsdave wrote: »
    Your question seems to contradict itself.

    How So?
    coylemj wrote: »
    ...then go and borrow money for the car but ask your bank for the money - a finance company will charge you way over the odds and the car salesman will get a big commission which is money straight out of your pocket.

    If you own a house you shouldn't be borrowing money from a finance company. The mortgage agreement you sign for with the bank probably says that the house will act as security for all money you owe that bank which means the car loan would be secured on the house which in turns means that the bank should have no problem lending you the money as long as the loan to value (LTV) doesn't cross any important threshold and you can show that you can afford the additional monthly repayments.

    Typical APR from our bank is 8.45% whereas the car dealership will do the it for 4.9% APR.
    My general impression was to stay away from banks for car loans etc. as their APR is typically much higher (as illustrated above) - unless I'm just with a s**t bank?

    Thanks again for all inputs.

    SH


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    #5
    Toots
    Administrators, Business & Finance Moderators, Society & Culture Moderators Posts: 16,905 Admin ✭✭✭✭✭Toots


    It's part of the t&c of your mortgage application that if your financial circumstances change even after your mortgage is approved, but before you complete (ie get the keys to the house) then you need to inform the bank. Your mortgage is approved based on the information that you provided in your application, where you would have to disclose any "material facts" about your finances etc. If you take a car loan (BTW what the dealer gives you is hire purchase, not an outright loan) then you WILL need to tell your bank and they'll have to pass this information to the underwriters to reassess your mortgage application, although I doubt it'll take as long as the initial application.

    If I were you and you really need the loan before you draw down your mortgage, I'd ask the bank to give you an indication on how it would affect your application. It might not mean that they change their minds and say 'no money for you!' although it will mean that you'll get approval for a lower amount if you go ahead with a loan. If you have that information then you can make a decision whether or not you can realistically work with the amount they'll loan you if you have the car loan also, and weigh up if it's worth going ahead with the car purchase.

    Also if you don't tell the bank about the car finance and they find out, they could very well refuse to provide a mortgage altogether on the basis that you failed to disclose it.


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    #6
    halkar
    Registered Users Posts: 1,240 ✭✭✭halkar


    SparrowHawk wrote: »
    How So?



    Typical APR from our bank is 8.45% whereas the car dealership will do the it for 4.9% APR.
    My general impression was to stay away from banks for car loans etc. as their APR is typically much higher (as illustrated above) - unless I'm just with a s**t bank?

    Thanks again for all inputs.

    SH

    When you buy from dealer with loan from them you have to pay them the full price of the car and you will have no room to discuss any discounts. You could get few thousand off if you go to them with cash. Some banks have special car loans. With cash you will have more flexibility. You can buy the same car 1-2 year old for much less then what you pay for new one on dealers loan.


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