Take out a car loan before or after buying a Buy to Let?

G

GoldenApple

New Member
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2
Personal details
Age: 46
Spouse's age: 42

Number and age of children: 1 child, 16

Income and expenditure
Annual gross income from employment or profession: 62k
Annual gross income of spouse/partner: 80k

Monthly take-home pay: 8,200 (combined)

Type of employment - Public sector (myself); Private company (spouse)

Summary of Assets and Liabilities
Family home value: 550k
Mortgage on family home: 350k
Net equity: 200k

Buy to Let Property value: No
Buy to let Mortgage: No

Family home mortgage information

Interest rate 2.1%
Type of interest rate: fixed for 4 years, 2.5 remaining

Remaining term: 24 years
Monthly repayment: 1,650

Other borrowings – car loans/personal loans etc
No car loans
Do you pay off your full credit card balance each month? yes

Pension information
Public sector pension for 15 years.

Buy to let properties - None

What specific question do you have or what issues are of concern to you?
I'm currently considering taking a car loan of 30,000 euro to buy a car. But I'm also concerned this will affect our borrowing ability in the future (e.g. next year) when we want to take another mortgage to purchase a 2nd property, a buy to let property. May I ask your advice if I should take this car loan now or wait until we get the 2nd mortgage approved? Many thanks.
 
Yes it absolutely will, as it is I'm not sure how favorably a bank will look at an additional mortgage unless you plan on putting up a lot of equity in a b2l?
 
GoldenApple said:
Annual gross income from employment or profession: 62k
Annual gross income of spouse/partner: 80k
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GoldenApple said:
Mortgage on family home: 350k
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With such a large mortgage, you should not be even remotely considering a buy to let investment.

You don't appear to have any savings or investments which suggests that you are struggling a bit - or maybe you have used surplus income to pay down your mortgage ahead of schedule.

You have a low mortgage rate for the next 2 years, but an increase after that could put you under pressure.

I would go further and say that if you are unable to buy a car for cash, you should not be spending €30k on a car.

GoldenApple said:
if I should take this car loan now or wait until we get the 2nd mortgage approved?
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This makes it sound as if you don't need the car now? If you don't need a car, don't buy a car until you need it.

If you anticipate buying a car in a year, then start saving for it now.

Brendan
 
GoldenApple said:
Personal details
Age: 46
Spouse's age: 42

Number and age of children: 1 child, 16

Income and expenditure
Annual gross income from employment or profession: 62k
Annual gross income of spouse/partner: 80k

Monthly take-home pay: 8,200 (combined)

Type of employment - Public sector (myself); Private company (spouse)

Summary of Assets and Liabilities
Family home value: 550k
Mortgage on family home: 350k
Net equity: 200k

Buy to Let Property value: No
Buy to let Mortgage: No

Family home mortgage information

Interest rate 2.1%
Type of interest rate: fixed for 4 years, 2.5 remaining

Remaining term: 24 years
Monthly repayment: 1,650

Other borrowings – car loans/personal loans etc
No car loans
Do you pay off your full credit card balance each month? yes

Pension information
Public sector pension for 15 years.

Buy to let properties - None

What specific question do you have or what issues are of concern to you?
I'm currently considering taking a car loan of 30,000 euro to buy a car. But I'm also concerned this will affect our borrowing ability in the future (e.g. next year) when we want to take another mortgage to purchase a 2nd property, a buy to let property. May I ask your advice if I should take this car loan now or wait until we get the 2nd mortgage approved? Many thanks.
Click to expand...
Looking at your finances as a whole I would say buying a second property should not even enter your thinking.

But parking that, what are your expectations for both your financing costs and then rental yield on a BTL (after allowing for any EA fees, vacancy periods, rent non-payment, maintenance etc.). Then factor in that you are both higher rate income tax payers.

I’d wager your expected after tax return will be pretty pitiful and the level of risk you’d be taking would be huge relative to your net worth and income. Your existing mortgage relative to income and age already look on the high side.
 
Thanks all for your feedback and questions. Yes, a second property would cost a lot. The deposit is from overseas. My current car needs to be replaced, as had an accident in March. But it still can be driven at the moment as usual. That's the reason to change a car.
So I do need a car for daily life. And it's not easy to wait for the savings to buy a car.
I'm still choosing to buy a normal car or an electric car. Would anyone give me some advice on it from the cost perspective? e.g. insurance for an electric car is very high? would the car value for trade-in for an electric car after 5 years be a lot less than a normal car's value? Thanks.
 
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