applying for mortgage, should i get a car loan?

giftgrub

I'm changing jobs which means i'm losing a company car. We're in the process of applying for a mortgage (first time)

I'll need a car, the missus has one which she needs. I was thinking about getting a top up on a current loan to buy a jammer

I currently owe about 1500, and was looking at another 2-3 grand.

Should i go for it? or cycle and bus it until we get our mortgage?

cruizer22b

Id wait till the mortgage come through.

stepbar

Depends.... How are you on the multiples? i.e 5 times your gross for a sole app and 4.5 times for a joint app. Applying for a small loan is not going to affect your app drastically.

Zaph

One of the conditions of my mortgage approval was that I paid off my car loan in full. Would have only been about 4-5,000 at the time, but the way the bank looks at it is that you have a regular amount going out every month that could be used to repay the mortgage, particularly if there are interest rate increases. That was nearly 4 years ago when they were less strict about multiples and stuff. Nothing stopping you getting a car loan after the mortgage is approved.

Clink

Deffo hang on until you get the mortgage. Any loan you have reduces the amount that you can borrow. Unless you get a loan from the credit union loan that is, they don't should up on your credit rating.

Degsy

Clink wrote: »

Deffo hang on until you get the mortgage. Any loan you have reduces the amount that you can borrow. Unless you get a loan from the credit union loan that is, they don't should up on your credit rating.

Or ya can get cash from your credit card..not a good idea but it can be done!

brettmirl

Degsy wrote: »

Or ya can get cash from your credit card..not a good idea but it can be done!

Def not a good idea! The cash advance fees and interest on credit cards are usually very high.

Go the credit union route if you can. As a previous poster said, a credit union loan will not show up when your bank does a credit check.

Clink

mick_irl wrote: »

Def not a good idea! The cash advance fees and interest on credit cards are usually very high.

Go the credit union route if you can. As a previous poster said, a credit union loan will not show up when your bank does a credit check.

The last thing you want to be getting into is buying a car on your credit card! I'm sure the amount you owe on a credit card comes up in the credit check. Hang on and just use your bike I'd say.

bobk

Don't put yourself in a position where you cannot afford to repay the loan and mortgage.

Mortgages are offered on your ability to repay.
If you have a carloan, a bank will give you less money and for good reason.
The repayments for the carloan will come out of your NET income therefore reducing your ability to repay.

This is how it works.

a single applicant on 50k will qualify for approx 260,000 over 35 years on this basis.

The bank will give a person on this income 50% of their net disposable income (NDI) to cover this.
approx gross income per month - 4166
approx net income per month - 3300
50% of net income - 1650

repayment on 265000 over 35 years on an average rate of 5% - 1304
but a bank adds 2% to this in order to cover future possible rate changes
repayment on same amount +2% - 1652


Now, if you have a car loan of, say, 400 per month then your net income is reduced by that amount.

so, new net income is approx 2900
the loan the person can now qualify for is only 230,000
the repayment on this +2% is 1469 which is approx 50% of net income

This is what the bank considers a person can afford to repay.

if they were to borrow the mortgage of 260,000 and then they got a car loan with a repayment of 400 pm.
Then the person will only be left with around 40% net income to cover all living expenses which is a huge stretch and will generally lead to more debt.

seek proper advise before proceeding

stepbar

bobk wrote: »

Don't put yourself in a position where you cannot afford to repay the loan and mortgage.

Mortgages are offered on your ability to repay.
If you have a carloan, a bank will give you less money and for good reason.
The repayments for the carloan will come out of your NET income therefore reducing your ability to repay.

This is how it works.

a single applicant on 50k will qualify for approx 260,000 over 35 years on this basis.

The bank will give a person on this income 50% of their net disposable income (NDI) to cover this.
approx gross income per month - 4166
approx net income per month - 3300
50% of net income - 1650

repayment on 265000 over 35 years on an average rate of 5% - 1304
but a bank adds 2% to this in order to cover future possible rate changes
repayment on same amount +2% - 1652


Now, if you have a car loan of, say, 400 per month then your net income is reduced by that amount.

so, new net income is approx 2900
the loan the person can now qualify for is only 230,000
the repayment on this +2% is 1469 which is approx 50% of net income

This is what the bank considers a person can afford to repay.

if they were to borrow the mortgage of 260,000 and then they got a car loan with a repayment of 400 pm.
Then the person will only be left with around 40% net income to cover all living expenses which is a huge stretch and will generally lead to more debt.

seek proper advise before proceeding

+1 to all that. Don't over stretch yourself. It's not smart TBH.