Existing finance when applying for a mortgage?

[probedb]

I'm wanting to apply for my first mortgage around Q1 2020, but I already have a loan which I probably want to add to since my car's engine died and I need a new car.

How does existing finance affect a mortgage application? I've never missed payments etc but have never actually done an Experian Credit Score check either, mainly because I've always rented and moved frequently and for the majority of things my bank account and credit card have stayed registered at my folks....because it's easier I won't have any other outstanding finance at the time of the application.

Any thoughts?

[emicen]

Get yourself on Experian and start working through their negative flags.

Moving a lot, that’s probably gonna be a negative.
Bank and/or credit accounts not at current address, probably gonna be negative.
You on the electoral role at your present address...?

[Killer2005]

Have a play with an affordability calculator, should give you an idea how much you could get.

https://www.barclays.co.uk/mortgages/mortgage-calc...

[Nickbrapp]

Get on the electoral roll now where the cards are registered

It’s all on affordability, so having debt will reduce the amount you can borrow, but not stop you borrowing all together

For instance, I’ve just applied for a mortage, a £12k car loan meant they would lend me £5k less.

Every bank is diffrent too.

[Caddyshack]

In my experience of 23 yrs as a prolific mortgage broker I would forget about Experian etc.

Moving about a lot won’t have been great but just register where you are now, find a broker and get an agreement in principle.

[dogz]

Lenders will decide if they are prepared to lend to you based on their scorecard. It’s made up of many factors which differ slightly between lender depending on the type and quality of loans they are looking to write

The big things which will impact whether they will lend to you will be your salary, credit history (late payments / defaults / ccjs), what credit obligations you have, LTV of the property you are looking to buy. Rather than working on income multiples, lenders calculate your affordability for the mortgage based on your incoming and outgoings and will stress this to make sure if interest rates rise you can still afford it

Most mainstream lenders will allow you to enter your basic financial situation and they will give you a very rough decision on wether they will lend or not. It’s also worth looking at sites such as money supermarket, compare the market etc to see what deals are available from what lenders

In summary though having a loan shouldn’t detract from you getting a mortgage.

[EB89]

It's all very circumstantial - But I've had no issues in obtaining a mortgage with £10k credit card debt and a small PCP vs £50k salary

If I where you (And as I did...) I'd try getting a few AIP's with lenders that do soft credit checks (doesn't affect your score & not visible to anyone but you) This will give you a feel for what could be possible.

I had some concerns about getting a mortgage with debt, so in a geeky way up until recently, every month or so I'd apply for an AIP with Natwest, Halifax etc (They do soft credit checks) and that would give me feedback about how much they where prepared to lend and at what LTV which I tracked and it all improved over the course of 12 months.

It's worth checking out your credit file, I've been using https://clubs.moneysavingexpert.com for a while. Completely free. I'v tried a lot of the paid tools but think this is better anyway regardless of being free.

[EB89]

Also, very important to ensure that you are on the electoral role and that all credit accounts have your current address.

I have 5 addresses in the last three years but very good, above average credit scores. So you can overcome the address history issue.

When you access your credit file, the report will confirm which address each credit file is registered against.