Car loan affecting mortage application

[grapefruit]

Hi, we are hoping to be in a position to apply for First time buyers mortage next year. This year we purchased a car financed through the dealership, we are mangaging payments & also saving every month for deposit thankfully. My query is will this go against us when applying for mortage or will it be seen as a necessity & that most people have a car loan? Car had to be purchased as old one died & was costing a fortune to keep on the road.

 

[Monbretia]

The bank will have a set percentage of monthly income needed for loan repayments, all your repayments to loans including your existing and your future mortgage will have to fit into this criteria. It's not a question of whether or not they consider a necessity or that a car loan comes against you as such. Any other loan repayments for whatever reason decrease the amount of income you have available to pay a mortgage, fine if you have enough for paying both, not fine if the bank criteria says you have not.

 

[Brendan Burgess]

Liam Ferguson has written a great Key Post on the topic

Preparing for a mortgage application

 

[grapefruit]

Many thanks for the replies.
So if we are seen to be able to pay mortgage repayments, car loan & all other monthly living costs etc & still have money leftover to "live off" we'l say, it's really the amount we are approved that will be affected, & not so much approval full stop??

 

[44brendan]

So if we are seen to be able to pay mortgage repayments, car loan & all other monthly living costs etc & still have money leftover to "live off" we'l say, it's really the amount we are approved that will be affected, & not so much approval full stop??

Exactly!!