Impact of personal loan on mortgage applications?

[DickP]

Hi

I am interested to know what impact a personal loan could have on mortgage applications as a first time buyer.

In essence it would be a loan on a car for example rather than spending the full amount in cash that I have. Would this have negative impact on what mortgages may be available for the following twelve months?

Thanks,

[Sarnie]

DickP said:

Hi

I am interested to know what impact a personal loan could have on mortgage applications as a first time buyer.

In essence it would be a loan on a car for example rather than spending the full amount in cash that I have. Would this have negative impact on what mortgages may be available for the following twelve months?

Thanks,

Will it reduce your "score"? Yes.


Will it reduce your affordability? Yes.


Will it stop you getting a mortgage? That depends on where your "score" is currently and how tight your affordability is....Eg your affordability may currently be circa £200k for example, the loan may reduce that to £185k but if you are only needing £175k then it's fine...….

[DickP]

Hi

Okay great thanks. Makes sense.

Thanks

[DavidY]

We were told if you keep finance arrangements A,B,and C then you can borrow XXXk, if you pay off deal A you can borrow YYYk on the mortgage, and if you pay off A, B and C then you can get ZZZk

It was up to use then to decide.

[Edible Roadkill]

I always make sure that I’m low on other financial commitments a time the time of remortgage. Just so there is no problem.

If the car can wait, get the house in order 1st, then look at arranging other things.

[brad93]

I got a mortgage no problem with a personal loan, obviously if your personal loan is like £20k it'll have more of an impact. Think I had about £6.5k left on mine when i got approved

[Sarnie]

brad93 said:

I got a mortgage no problem with a personal loan, obviously if your personal loan is like £20k it'll have more of an impact. Think I had about £6.5k left on mine when i got approved

For reference, it's the monthly payment that impacts affordability, not the balance.


So, a £5k loan at £400pm would impact you more than a £15k loan over a longer term with a £250pm payment...….