Mortgage Planning with PCP/Lease

[lawyered07]

Due to remortgage in the summer and Mrs Lawyered currently has a Leon on PCP for £250pm coming up to the point where we could hand back the keys if we want. i am considering it as she wants something a little bigger, although i know we would be slightly better off keeping for the full 4 years (March 2021) and either privately selling or trading in - by roughly £1k on a reasonable private estimate i think.

its a price i am willing to consider, particularly where we hand back now, take a lease for low £200's and potentially get a slightly better mortgage rate due to lower monthly commitments. plus then not having the aggro of privately selling.

im not sure whether the full remaining value of the PCP finance shows on the credit report (i think so but couldnt find anything for sure) so lease will maybe help there too.

any help appreciated to make sure i dont miss something and drop a massive clanger!

[Sarnie]

No one can answer your questions without having your full financial details to assess your affordability.

Affordability is based on the monthly payment of your commitments, not the size of the debt......

[Caddyshack]

As Sarnie says but very rough rule of thumb, take 12 times the monthly payment off your income and multiply by 5 is a very, very rough impact of how much lower the max mortgage would be in worst case scenario. Some lenders afford calcs have less impact than others.

[lawyered07]

thanks. i am pretty happy that i am well within affordability...will be borrowing less than the original mortgage and i am earning a decent amount more.

understood on the monthly outgoings being the main consideration. will the full balance on PCP not be much of a concern?

[Caddyshack]

lawyered07 said:

thanks. i am pretty happy that i am well within affordability...will be borrowing less than the original mortgage and i am earning a decent amount more.

understood on the monthly outgoings being the main consideration. will the full balance on PCP not be much of a concern?

Also worth considering that most brokers can get deals from the same lender to keep your business with immediate and guaranteed acceptance, affordability models are then irrelevant and the lender will not look at any credit commitments or underwriting.