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Mortgages and other loans

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  • 18-09-2011 7:48pm
    #1
    djd80
    Registered Users Posts: 440 ✭✭


    Hi All

    My wife and I are hoping to buy a house in the first 6 months of next year which will obviously involve getting a mortgage.

    Problem I really need to change my car and would need to get a loan of about 8k to trade up to something decent which will do me for the next few years.

    Could anybody explain to me how having an existing loan affects the mortgage application process and the amount which might be borrowed?

    Thanks in Advance..


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    #2
    El Weirdo
    Registered Users Posts: 11,646 ✭✭✭✭El Weirdo


    IIRC, when we originally went for our mortgage I was 2 years into paying off a 3 year, 6k car loan. We were told that if I cleared the debt the maximum amount we would be able to borrow would have increased by about 25k.

    Now take from that what you will as this was about 5 years ago and I'm sure a lot has changed since then.


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    #3
    bath handle
    Banned (with Prison Access) Posts: 370 ✭✭bath handle


    djd80 wrote: »
    Hi All

    My wife and I are hoping to buy a house in the first 6 months of next year which will obviously involve getting a mortgage.

    Problem I really need to change my car and would need to get a loan of about 8k to trade up to something decent which will do me for the next few years.

    Could anybody explain to me how having an existing loan affects the mortgage application process and the amount which might be borrowed?

    Thanks in Advance..
    Number 1. you can't manage money. there are perfectly all right cars for a lot less than 8k. if you intend buying a house you should be said ing a deposit. if you have savings,why do you need to borrow at all?


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    #4
    djd80
    Registered Users Posts: 440 ✭✭djd80


    El Weirdo wrote: »
    IIRC, when we originally went for our mortgage I was 2 years into paying off a 3 year, 6k car loan. We were told that if I cleared the debt the maximum amount we would be able to borrow would have increased by about 25k.

    Now take from that what you will as this was about 5 years ago and I'm sure a lot has changed since then.

    Cheers for the info...
    bath handle wrote: »
    Number 1. you can't manage money. there are perfectly all right cars for a lot less than 8k. if you intend buying a house you should be said ing a deposit. if you have savings,why do you need to borrow at all?

    Thats a bit of a jump to saying I can't manage money when you know absolutely nothing about me. Yes we have savings but are not going to touch them for the moment. Also, I will be a doing a bit of driving for work and the mileage I receive will almost cover the loan most months. Yes there are cars for under 8k but I want a decent car which will have some value ina few years and wont pack up in the meantime.

    Obviously you couldn't have known that info but still no need to be making rill-informed decisions about peoples ability to manage their cash based upon a short post and a simple question.


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    #5
    ShadowHearth
    Registered Users Posts: 22,929 ✭✭✭✭ShadowHearth


    djd80 wrote: »
    Hi All

    My wife and I are hoping to buy a house in the first 6 months of next year which will obviously involve getting a mortgage.

    Problem I really need to change my car and would need to get a loan of about 8k to trade up to something decent which will do me for the next few years.

    Could anybody explain to me how having an existing loan affects the mortgage application process and the amount which might be borrowed?

    Thanks in Advance..

    8k to trade up and buy a house.....

    as a petrol head i will say this: its a bit stupid.

    if your current car drives and has no major problems, i would focus on house loan for now. sort out your priorities first m8.

    when we applied for mortgage, we had about 1k standing loan left to pay. it was a small 2k loan in the first place.

    bank had no problem with approval.


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    #6
    bath handle
    Banned (with Prison Access) Posts: 370 ✭✭bath handle


    djd80 wrote: »
    El Weirdo wrote: »
    IIRC, when we originally went for our mortgage I was 2 years into paying off a 3 year, 6k car loan. We were told that if I cleared the debt the maximum amount we would be able to borrow would have increased by about 25k.

    Now take from that what you will as this was about 5 years ago and I'm sure a lot has changed since then.

    Cheers for the info...
    bath handle wrote: »
    Number 1. you can't manage money. there are perfectly all right cars for a lot less than 8k. if you intend buying a house you should be said ing a deposit. if you have savings,why do you need to borrow at all?

    Thats a bit of a jump to saying I can't manage money when you know absolutely nothing about me. Yes we have savings but are not going to touch them for the moment. Also, I will be a doing a bit of driving for work and the mileage I receive will almost cover the loan most months. Yes there are cars for under 8k but I want a decent car which will have some value ina few years and wont pack up in the meantime.

    Obviously you couldn't have known that info but still no need to be making rill-informed decisions about peoples ability to manage their cash based upon a short post and a simple question.
    You will pay a much higher rate of interest on a car loan than you will get on your savings. what you are proposing to do is just waste money. any mortgage provider will just subtract the outstanding balance of the loan from your savings to assess your cash position. you will also be screwing up your affordability. the amount of money left to li e on after paying loans will be smaller, hence you will be offered a smaller mortgage, if at all.
    you are planning to pay out a load of interest so that you will have a car worth something in a few years? That is the biggest lot of nonsense. Cars depreciate!


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    #7
    Supercell
    Registered Users Posts: 15,322 ✭✭✭✭Supercell


    The banks are only lending to the best candidates at the moment, people with 8K loans dont fit the bill unless they have huge salaries in which case they wouldn't need the loan.
    Why not get a cheap oldish reliable car like a Honda Civic or an economical Micra (if its just city driving your doing) or better will the current one really not last another year or two until you have got the house?
    https://www.loughlinstown.ie

    Have a weather station?, why not join the Ireland Weather Network - http://irelandweather.eu/



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    #8
    fricatus
    Registered Users Posts: 5,081 ✭✭✭fricatus


    djd80 wrote: »
    I really need to change my car

    Really need or really want? Is blue smoke coming out the back of it, or are you just sick of the one you have? Is it costing you money in repairs to the extent that you'd be better off changing it?

    Sorry for the snotty questions, but if you're going for a mortgage, your finances have to be in order, and an 8k loan is just going to be trouble, especially the way the banks are tightening up so much on their criteria.

    If your car is about to die, could you not just pick up an old Mondeo or Vectra for about €4k and pay for it out of your savings?

    You're better off not taking on a loan now - if you must do so, wait until you've been through a few months' mortgage payments and you know how much in repayments you can tolerate.


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    #9
    ShadowHearth
    Registered Users Posts: 22,929 ✭✭✭✭ShadowHearth


    fricatus wrote: »
    Really need or really want? Is blue smoke coming out the back of it, or are you just sick of the one you have? Is it costing you money in repairs to the extent that you'd be better off changing it?

    Sorry for the snotty questions, but if you're going for a mortgage, your finances have to be in order, and an 8k loan is just going to be trouble, especially the way the banks are tightening up so much on their criteria.

    If your car is about to die, could you not just pick up an old Mondeo or Vectra for about €4k and pay for it out of your savings?

    You're better off not taking on a loan now - if you must do so, wait until you've been through a few months' mortgage payments and you know how much in repayments you can tolerate.

    Even 4k loan is too much.

    I went from my skyline to 500ee ford mondeo to save some money and get mortgage. Worked well.

    I think op wants to have his pie and eat it too.


    Op, what is this desperate car you drove now, which is in need of ASAP change? If you are still driving it, then it shouldn't be too bad.

    Just focus on mortgage. Every single loan just makes you a worse candidate for mortgage. It's not 2006 where you could be on the dole and be approved for 300k mortgage. Banks are very anal these days.

    Best of luck, I hope you get it.


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    #10
    TwoShedsJackson
    Closed Accounts Posts: 9,438 ✭✭✭TwoShedsJackson


    djd80 wrote: »
    Cheers for the info...



    Thats a bit of a jump to saying I can't manage money when you know absolutely nothing about me. Yes we have savings but are not going to touch them for the moment. Also, I will be a doing a bit of driving for work and the mileage I receive will almost cover the loan most months. Yes there are cars for under 8k but I want a decent car which will have some value ina few years and wont pack up in the meantime.

    Obviously you couldn't have known that info but still no need to be making rill-informed decisions about peoples ability to manage their cash based upon a short post and a simple question.

    If you have savings, use some of them for the car. It is madness to save money at 3% or whatever, and take out a loan on which you will be paying 10%. Makes no sense whatsoever.


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    #11
    professore
    Closed Accounts Posts: 5,857 ✭✭✭professore


    TwoShedsJackson wrote: »
    If you have savings, use some of them for the car. It is madness to save money at 3% or whatever, and take out a loan on which you will be paying 10%. Makes no sense whatsoever.

    Banks are not lending, even to good loan risks. They are now clamping down on credit union lending. So if the OP takes a loan now and something unexpected comes up (say 3K medical bill) they have some savings to pay it off. If the OP uses his savings to buy the car, and then the bill comes in, and the bank then refuses the loan, they are screwed - it's moneylender time. It's not a simple as the interest rate.


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    #12
    fricatus
    Registered Users Posts: 5,081 ✭✭✭fricatus


    TwoShedsJackson wrote: »
    If you have savings, use some of them for the car. It is madness to save money at 3% or whatever, and take out a loan on which you will be paying 10%. Makes no sense whatsoever.
    professore wrote: »
    Banks are not lending, even to good loan risks. They are now clamping down on credit union lending. So if the OP takes a loan now and something unexpected comes up (say 3K medical bill) they have some savings to pay it off. If the OP uses his savings to buy the car, and then the bill comes in, and the bank then refuses the loan, they are screwed - it's moneylender time. It's not a simple as the interest rate.

    Ah yes, but TwoShedsJackson did say to use some of the savings to buy the car, not all. You are of course right that the OP should make sure to have some savings set aside for emergencies. I would not be piling every penny in savings into the deposit on the house for example.


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    #13
    donalg1
    Closed Accounts Posts: 3,513 ✭✭✭donalg1


    Basically if you are taking out a mortgage they will get the repayment on the amount you need to borrow, next they will get this repayment as a percentage of your income and generally they would look for this to be under 30% although today they would most likely need this to be closer to 20%. So any loan repayments would impact heavily on this percentage.

    e.g. say you take out a loan of 150k over 30 years and the interest rate is 5.5% the monthly repayment will be approx €851.68, based on a gross income of €30k per annum the repayments work out to be roughly 33% of income.

    Now take the same figures with a loan of €8k say paying €50 per week or €216 per month and the percentage works out at 43% of income.

    The above figures are approximate but still quite accurate so you can see the impact a small car loan can make on your mortgage application.


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