Car Loan threat to Mortgage

B

beachman

Registered User
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Got a mortgage last year, which is all formally approved, the deposit of 25k has been to the buidlers, but broker says PTSB might ask me to get rid of my car loan (also with PTSB) before I can close on the deal when I get the keys. that's about 20k which I can comfortably afford to pay back over next four years even with the mortgage. but if PTSB insist i clear the car loan by December, that might be a problem. has anyone a solution??
 
Theres a couple of things you could do. You could increase your repayment on your car loan to the max that you can afford (try increasing it to your mortgage repayment + your existing repayment), this will bring down the balance of your car loan significantly. Then, before you draw down your mortgage, reschedule your loan - extending the term in order to decrease your monthly repayments. Lower monthly repayments may mean that you can afford to keep the loan along with your mortgage.

This sounds messy but it may mean that you can keep your loan and it would be a lot easier than trying to come up with 20k to clear it altogether.

The other option is to take out a credit union loan to repay your PTSB car loan. Check that the c.u is not part of the ICB though or this could be a total wate of time.
 
Good advice. By the time you draw down the big mortgage and the hardballing starts about your large car loan you will have shown them you can tolerate HIGH monthly outgoings for 6 months or more .

If the mortgage is supposed to be 1500 a month and the car 500 a month then you should pay 2000 monthly off the car for now because you do not have a mortgage quite yet and could .

If you cannot pay the 2000 in that example then the bank IS OBVIOUSLY correct and you just proved it for them
 
>Got a mortgage last year, which is all formally approved, the deposit of >25k has been to the buidlers, but broker says PTSB might ask me to get >rid of my car loan (also with PTSB) before I can close on the deal when I >get the keys.

Is an institution entitled to add conditions to a loan offer following approval?
 
they have a general 'revisiting' clause if they think your circumstances have changed. Interest Rates for example.

They can do it until drawdown. Once you have the money thats that.
 
thanks for all that. the credit union could be a good route which i'll investigate straight away.
 
Not for car loans . CUs can be very competitive so start here

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If the bank thinks that you should pay this loan off first and that you wont be able to sustain this with the mortgage would you not as well examining if you need a car that costs this much or if you can pay a large part of it off. Maybe they have a point. I don’t see why everyone sees the credit union as a way to fool the banks, its still debt and you may find yourself unable to pay if/when interest rates go up on both the mortgage and the car loan.
 
beachman said:
thanks for all that. the credit union could be a good route which i'll investigate straight away.
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Be careful with this option, they are going to want to know where the money came from, they, the bank that is, will not just be happy that the loan has been paid off.

They will expect you to have notified them about savings you have when you applied for the mortgage initially. We had the same issue with the mortgage, but it was queried prior to the loan offer being issued. We resolved the issue by getting my dad to get a credit union loan, as our CU is connected to ICB, and we just make the repayments.

Great of him to do it, but he had to write a letter to say that he was gifting us the money as a wedding gift. I think he did the same with my sister a few years ago, but just stated it was a gift and that he had no interest in the house and was not expecting it to be repaid!

Dads are great eh?

Best of luck
 
Banks allow 35% of your net disposable income to service all loans (and allow for a 2% rise in interest rates). Many people feel they can afford more than this, especially those on higher incomes.

I would personally recommend the first option I suggested as Beachman could see how well he would cope with higher repayments and at the same time quickly bring down his car loan balance.

I suggested the CU as an alternative option if he really feels he can afford to keep his monthly repayments as they are, not as a means of fooling the bank. Also, CUs are often more flexible in terms of repayments etc.

These are options that the banks don't ever tell you about.
 
How did he get €25k deposit , did he save hard ??? How hard and for how long ???
 
i certainly saved hard for a long time - four years to riase an almost 10 per cent deposit. so i was always putting away a large monthtly amount. fact is i need a car so there was alsways going to be a loan of some sort. anyway, thanks for all the advice.
 
Good luck with sorting it out.

I think mortgage lenders are a bit unrealistic when it comes to car loans. I'm not saying you should be allowed to be financing a new 911 Turbo when you're trying to get your first place but I've heard of them giving people hassle over car loans of less than 10k even though they're on good money.

I have a car loan of nearly €40,000 left on the term and I've been told one of the conditions of the mortgage I am applying for being approved is that I pay off the car loan before drawdown. It's €800 a month so fair enough.

The way I am getting around it is to get my parents to pay off the loan and I am going to pay them back instead of the bank.. if that's an option for you Beachman then maybe look into it.
 
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