When you take out any sort of finance deal, you might wonder how it may affect your overall financial health. With so many of us taking advantage of being able to spread the cost of products through finance, you’ll want to be safe in the knowledge that taking out another package won’t negatively affect your existing finance deals.
One of the biggest concerns you may have is your mortgage. Almost certainly the biggest and most important finance product you will have taken out, the last thing you want to do is to have a new package put it at risk. And you may also be thinking of taking out a car finance package now with the hope of having a mortgage in future. Will that cause any issues?
Here’s our quick guide to explain how car finance packages can affect your mortgage.
As with all types of finance application, when you apply for a mortgage through your bank or a broker, your financial history will be closely examined. This is for two reasons.
One, to see how healthy your financial record is. If you have a history of late payments, defaults and even bankruptcies, then you are likely to have a low credit rating. While in some finance packages this will mean you get a worse deal, for a mortgage it may just result in you being refused a deal.
So if you have a car finance package and have missed some payments or had to do some work to manage your payments, this will be recorded on your file and will affect your credit score.
Before you apply for any type of finance package, you should have a look at your credit file and credit score to see the health of your financial record. If there are any black marks on there, take steps to repair them. This can be through consolidating payments to ensuring any outstanding debt is settled quickly.
When it comes to taking out a car finance package before or after you take out a mortgage, make sure you have a good look at what you can afford to pay for. If you take out a car finance package that leaves you with little money left over each month, it’s more likely to cause an issue if there are any unexpected costs or changes to your personal life that affect your income. So, whether its before or after you’ve taken out a mortgage, make sure you only take out a car finance package you can comfortably afford.