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How will buying a car on finance affect your chances of getting a mortgage in 2020

So… you’d like to purchase a car using finance but you’re unsure of how it will impact your mortgage application. Let us explain this common dilemma and get you on your way to a new car. Worry-free.

What is the link between my car finance and a mortgage?

 

Car finance in its simplest form is a type of loan, and therefore it is a type of debt. Debt is one of the key things which lenders will look at when you apply for a mortgage because it affects your credit score and is an indicator of how you deal with borrowing money. The bigger debt you have against your car, the lower the amount you will receive for a mortgage.

 

How can car finance affect my credit score?

 

Like all repayment schemes, your credit history will be checked by the lender before entering into a deal. This credit check will demonstrate whether you can afford it and whether you have a good track record of repaying any loans or debts you may have. Your credit score will fall temporarily.

 

Once you have agreed a suitable repayment schedule, the way that you honour this will affect your credit score. Late payments will damage your score and timely payments will increase it. Essentially, your credit score is a reflection of your responsibility with borrowed money so to create a good score you need to stick to your repayment agreement.

 

 

How else does car finance affect my mortgage application?

A mortgage lender needs to gain a good understanding of your finances in order to determine how much they can lend you and how much they think you can afford to repay per month. To do this your bank statements, regular outgoings and any standing orders will be scrutinised which includes your car finance repayments.

 

If you are spending £250 a month to pay for your car, you have £250 less to pay back on your mortgage – or that’s how mortgage lenders will view things. Calculate your car finance 

How can I increase my chances?

Stick to your repayment schedule diligently – missing payments will affect your credit score for years to come, even if your loan has been paid off

If the timing coincides well, wait until you have finished your car finance deal to make your mortgage application – this means there is one less thing to go ‘against’ your financial circumstances

Pay the remaining amount in full – if this is an option for you it could greatly benefit your application and credit score

Tailor Made Car Finance

Unlike many other loan companies, Tailor Made Car Finance will perform a “soft credit check” prior to your formal loan application. It will not affect your credit score as nothing will be updated on the central credit reference databases but will still check your credit history in order to help you apply to the most appropriate car finance lenders. We actually cater for individuals with Poor or Bad Credit scores

As well as saving you time and protecting your credit history, this will also benefit any potential mortgage applications because of the lack of official loan application.

Contact

Opening Hours:
Monday to Friday: 8am to 8pm
Saturday: 9am to 5pm

Sunday: Closed

Tel:
01279 260363

Email:
info@tailormadecarfinance.com

Address:
Jacks Yard, The Street, Sheering, Essex, CM22 7LX

‘Tailor Made Car Finance’ is a Trading Style of ‘Oakleigh Cars Ltd’ Incorporated and registered in England and Wales. Company Number 10688399. Registered Office: Jacks Yard, The Street, Sheering, Essex, CM22 7LX. Email: info@oakleighcars.co.uk. Telephone: 01279 260363.
Oakleigh Cars Ltd is regulated by the Financial Conduct Authority. Registered Number 822703.
Oakleigh Cars Limited is a credit broker, not a lender. Oakleigh Cars Limited is authorised and regulated by the Financial Conduct Authority,  All finance is subject to status and income.

Your vehicle may be repossessed if you do not keep up the repayments.

Tailor Made Car Finance Loans are applicable to UK residents only. Calls may be monitored or recorded.

Applicants must be 18 or over, terms and conditions apply, guarantees and indemnities may be required. Certain exclusions for NI residents. Tailor Made Car Finance can introduce you to a limited number of finance providers based on your credit rating and we may receive a commission for such introductions. Written quotation on request.

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© Copyright 2020 Oakleigh Cars Ltd

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