Impact of personal loan on mortgage application?

[DickP]

Hi,

It isn't clear to me what impact say a sub £10,000 personal loan will have on a mortgage application if it's within six months of each other.

Providing the repayment value is included when doing the affordability calculations such as during a Mortgage in Principal then it won't have any other adverse effect will it? Or are more factors than just the monthly repayment cost included in the assessment?

Thanks,

[Sarnie]

DickP said:

Hi,

It isn't clear to me what impact say a sub £10,000 personal loan will have on a mortgage application if it's within six months of each other.

Providing the repayment value is included when doing the affordability calculations such as during a Mortgage in Principal then it won't have any other adverse effect will it? Or are more factors than just the monthly repayment cost included in the assessment?

Thanks,

It's not possible to answer without knowing all of the details I'm afraid........if you earn £200k a year looking to borrow £300k, the loan is over five years and is £200pm, it won't have any impact........................if you earn £20k and are looking to borrow £90k on a £100k property and the loan is £400pm over two years, then it is likely to impact your affordability yes........

[DickP]

Hi,

Thanks.

I suppose the question really is, if you include the repayment cost into the Mortgage in Principal calculations, are there any other considerations made beyond the repayment?

For example I saw some comment that if someone say took a PCP out on a £100,000 car, even if their PCP repayments were super low and mere £200 per month for example, the lender would see a £100,000 loan against them?

Is it the same for personal loans or is it only the repayments and duration of the repayments term that they look at?

Thanks,

[Sarnie]

DickP said:

Hi,

Thanks.

I suppose the question really is, if you include the repayment cost into the Mortgage in Principal calculations, are there any other considerations made beyond the repayment?

For example I saw some comment that if someone say took a PCP out on a £100,000 car, even if their PCP repayments were super low and mere £200 per month for example, the lender would see a £100,000 loan against them?

Is it the same for personal loans or is it only the repayments and duration of the repayments term that they look at?

Thanks,

Some lenders will look at total indebtedness yes.............lenders have debt-to-income ratios also.......so some lenders won't care if the debt is £100k if the payment is low.....some lenders will specify that they won't accept applicants where their unsecured debt is more than 50% of their annual income for example......

[DickP]

Hi Sarnie,

Appreciate the comments, thanks!

[conanius]

Do you have the loan now?

If you don't, and you can, I'd wait.

[vulture1]

Mortgage then loan allows you to borrow more but you are then trying to get round things that are in place to stop people over extend themselves