GF advice

[Sweeney287]

I have asked a couple of people, but they don't know the answer, so I shall test the GF's knowledge.

 

The missus and I are thinking of getting a mortgage, however, she has a personal loan in her name which she took out for her mum. Said loan has about 3 years to run.

 

Her mum (who works for a bank) has told her that if we apply for a mortgage that the loan wouldn't get taken into account on the overall sum that we could get to buy a house, yet I think it will seeing as it they will look at what you can afford every month for the mortgage repayments.

 

General forum - Who's right?

[Elmyn Noos]

I don't know.

[Ezekiel 25:17]

Fuck did I do ??

[CaptainK]

General forum - Who's right?

 

When they work out your maximum mortgage amount, they normally base it on your salary - roughly 3 times your joint salary.

 

But they knock off any other money you owe on loans, credit cards, before doing the calculation.

 

So, if your joint salary was £35k, the maximum they might normally lend would be £35k x 3 = £105k.

 

But if you have a £5k loan already, then, it's (£35k-5k) = £30k x 3 = £90k maximum.

 

That's the normal method for working out how much they will lend. There are also other factors like value of property and size of deposit you're putting down, etc.

[Sweeney287]

Excellent, thanks Captain

[Elmyn Noos]

When they work out your maximum mortgage amount, they normally base it on your salary - roughly 3 times your joint salary.

 

But they knock off any other money you owe on loans, credit cards, before doing the calculation.

 

So, if your joint salary was £35k, the maximum they might normally lend would be £35k x 3 = £105k.

 

But if you have a £5k loan already, then, it's (£35k-5k) = £30k x 3 = £90k maximum.

 

That's the normal method for working out how much they will lend. There are also other factors like value of property and size of deposit you're putting down, etc.

 

I don't think that's right mate. I doubt they would knock the loan amount off your income in that way. I think they only factor it in by way of your monthly outgoings so they would take the monthly payments of the loan into consideration on the income and outgoings bit. Whether or not they would take into account the fact that mum in law is presumably paying the loan I don't know, but I would imagine they would.

[Tom R]

It's not the amount of the loan they deduct, it's the amount you pay anually.

 

If you're annual payments total, say £2k, then they'll deduct £2k from the amount you earn.

So in the example above your joint income would be £33k, not £35k.

 

You could try to get round it by getting it in writing from your GF's mother that she is the person paying the loan and provide evidence of that in the form of bank statements etc.

 

Probably won't make any difference though, as if she defaults on the loan then it'll be your GF whose credit rating suffers at the end of the day.

 

I assume your GF got the loan because her mother's credit rating wasn't up to scratch. That may have changed now. Your GFs mother should look at getting a consolidation loan to pay of the one her daughter took out.

That may be at a higher rate, due to her rating, but that should be considered "tough fucking shit" in my opinion.

 

Lesson - don't get credit for other people.

[Tom R]

also - if she works for a bank then she should a) have a decent credit rating anyway (you can get fired for not having a decent rating whilst on the other dishing out financial advice) All banks run credit checks these das before even making job offers.

And b) she should get cheap loans and credit as a perk of her job.

[Sweeney287]

I did warn her against it, but her mum was in tears and agreed to it!

 

As Noos says, we don't actually have it as an outgoing as we're not paying it, but the loan is in the girlfriends same. The loan is paid from an account in my girlfriends name and her mum pays the money into the same account every month.

 

It it came to it, could we not declare the money that the mother in law pays in as another income but would that lead to tax issues then?

 

Edit: thanks Tom

[Elmyn Noos]

I did warn her against it, but her mum was in tears and agreed to it!

 

As Noos says, we don't actually have it as an outgoing as we're not paying it, but the loan is in the girlfriends same. The loan is paid from an account in my girlfriends name and her mum pays the money into the same account every month.

 

It it came to it, could we not declare the money that the mother in law pays in as another income but would that lead to tax issues then?

 

Edit: thanks Tom

 

Ring an independent broker and they'll tell you. I can recommend these chaps as I've used them a couple of times.

 

Lime - Lifetime Insurance Mortgage Experts

[Sweeney287]

Thanks Noos