Impact of other debt on mortgage

My partner and I are in the second year of our mortgage and plan to trade up in another 2 years or so. However, while the mortgage is very managable now, we have very little other debt ( small credit card and car loan outstanding)

If we were to buy a new car ( in the region of €20,000) now and of enter into a 5 year car finance deal, could this damage any future mortgage increase involved in trading up?

Basically - does personal debt or outstanding loan have an effect on the mortgage payments from the banks point of view?

Yes - lenders will always take into account other debts - among other details - when assessing an applicant borrower for a mortgage loan. Why do you have any balance outstanding on your credit card(s)? They are usually a very expensive form of credit. If you buy the new car then will that mean that you will have two car loans outstanding? At what rates? Do you need a €20K new car or could you make do with something less expensive?

The credit card balance is very low- hardly costing anything really. THe total car loan debt would be €20k. Rates are quite good.

Its not really the affordabilty I am worried about, more the reaction of the bank. I believe an increased car re payment - but I was wondering if the bank would just see a large car loan and say no immediately?

They wouldn't say no outright (unless there were credit problems) but the amount you would be able to borrow would be reduced as lenders work on the basis of your committed outgoings (mortgage, loans, maintenance, etc) not exceeding 35-45% of your net monthly income.

Sarah

www.rea.ie