Mortgage approval and loans

[Amata85]

I was wondering if anyone could offer me some advice. My partner and I have roughly 25k saved for a house deposit. We intend to rent soon and reduce the amount we save which I understand is reasonable and will not effect our chances of mortgage approval, however I am now wondering about how having a loan will impact.

We currently have a loan of 1k from the credit union. Due to unforeseen circumstances it is very probable that we will need to top this loan up by 5k, thus owing 6k, so what I'm trying to find out is will this loan have a terrible impact on our chances of getting mortgage approval? We are very good savers and spend money on very little, especially in the past four months, but I'm worried all of our diligence will not pay off because of this loan?

I appreciate any advice or answers, thank you all for reading.

Amata

 

[Dave_Curry_IMC]

It depends on the monthly repayments of your credit union loan. The longer the term, the lower the repayments, and hence the lower the negative impact on your mortgage application. Of course, normally it is terrible advice to recommend paying a loan over a longer period (higher total cost of credit in the end), but if the mortgage is the priority, then it makes sense, and you can accelerate the repayments manually yourself.

The other point to note is that the credit union loan repayments will affect your application to different degrees with every bank.

Best Regards,
Dave Curry, Irish Mortgage Corporation
https://ie.linkedin.com/in/davecurryirl (LinkedIn profile and client testimonials)