Mortgage Query

I've applied for a mortgage thru a broker.

Her advice was as follows .....

She can get me 297k at a 5 year fixed rate of 5.53%. This is over 35 years.

However, she says that this is conditional on me clearing my car loan of 33k which costs me 800 per month in repayments. If I dont then she can only secure me 149k

I've no problem clearing the car loan because I'll have the cash to do it, but I was speaking to the guy who provided me with the car loan and he said it didnt make sense, without being able to explain why it didnt make sense.

I'd greatly appreciate anyones views or opinions on the above

Many thanks!

I'd suspect the following is the reason your broker is saying this to you....

The mortgage provider will look at a number of factors when deciding to give a mortgage and how much to approve.

Gross salary - loan to value ratio and net disposable income (NDI - this is an amount that the mortgage provider will ideally want you to have to live on after repayments etc etc).

If you maintain your car loan with E800 per month repayments, in effect that means you'll have E800 less to put towards mortgage repayments, hence why mortgage provider will only approve the lessor amount if you maintain the car loan.

Hope that helps you - regards.

BM

Yeah I think thats the reason alright, and it makes perfect sense to me. What prompted my query was the comments from the finance guy and his vague comments about robbing Peter to pay Paul etc.

Its a condition of our mortgage that we clear our debt too, about 16k. does anyone know if you need to do this before you draw down, or within a certain time frame.

Thanks

sw girl

normally payments are made from your cheque and the balance paid to you, when you think of it, it saves you time and hassle as someone else is doing all the work for you, anything overpaid ( to the bank, credit union etc., ) is normally refunded back to you by them.

I had to do the same to get my mortgage..had to keep my NDI (net disposable income) below 40%, with my loan of €10k it was 41% and i couldnt borrow nearly as much as i wanted.