Does Having Loans Affect Getting A Mortgage?
August 25, 2021 | Emma Frost
If you're looking to buy a house and also need a personal loan, the first question that crosses your mind is likely, "does having loans affect getting a mortgage?" It's a great question!
Sadly, a personal loan will always impact your mortgage affordability. Lenders check your credit score and all monthly expenses to establish whether you can afford the mortgage repayments. But here is what you need to know to answer the question "does having loans affect getting a mortgage?".
How To Figure Out If Your Loans Affect Getting A Mortgage
Yes, mortgage providers consider all your debts when figuring out whether you're eligible for a mortgage and how much you can afford to repay monthly.
Any debts aside from the mortgage will play a significant role in how the provider views your application. Since you're already using a portion of your income to pay off other debts, you have less income available to put toward a mortgage.
If you are looking to get a mortgage and haven't yet taken out any additional loans, financial advisors recommend keeping it that way. The more free money you have, the more likely you qualify for the mortgage. Some experts will even suggest leaving a 6-month gap between taking out a personal loan and applying for a mortgage.
Simply Applying May Impact Your Mortgage Eligibility
While not always the case, your mortgage provider can use applications for personal loans as grounds to disqualify you from a mortgage.
All this sort of financial activity leaves a stamp on your credit file, resulting in lenders seeing it when they assess your mortgage submission. The following financial aids, in particular, harm your mortgage affordability:
- Credit card;
- Personal loans;
- Car finance;
- Mobile phone contract;
- Utility contract.
Generally, the more applications you've made to different loans in a short timeframe, the less likely you are to gain approval for a mortgage.
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Can You Still Get A Mortgage If You Have A Loan?
Once you’ve answered your initial "does having loans affect getting a mortgage?" question, you might be wondering whether all hope is lost. But thankfully, that's not the case. It is possible to get a mortgage and have a personal loan at the same time!
Even though lenders take all your debts into account, it won't necessarily prevent you from receiving a mortgage. When providers look at your financial climate, they'll look at whether you have enough money to take on additional finance. If you can afford the extra, you'll gain approval.
Although, it's worth noting that not all mortgage providers evaluate applications the same way. To ensure you get the best value, speak to a whole-of-market broker who can access mortgages across the United States.
Personal Loans May Improve Your Mortgage Application
It's not all doom and gloom. At times, loans can help your mortgage application! But you'll need to take the long-term view of things if you want them to benefit you. There are three ways you can use additional loans to help your future mortgage efforts:
- Boosting your credit score — When paid on time, a loan can help boost your score. Title loans, however, won't work here as they're not reported to the credit bureaus.
- Refinance — Some personal loans can be used to reorganize your existing credit card debts to make them cheaper and easily manageable. Over time, it increases your mortgage affordability.
- High interest — People use certain loan types to put the money in a high-interest savings account. The accrued funds are then used as a mortgage deposit.
Get Your Title Loans Or Payday Loans Today!
While the answer to "does having loans affect getting a mortgage?" is yes, small loans like Mississippi title loans and payday loans can help when emergencies strike. They can be paid off relatively quickly and are an option when you're struggling to pay medical bills, fix your home, or fund urgent travel while applying for a mortgage.
To start our process for either loan, just fill out the online form on our Mississippi Title Loans, Inc. website and wait for our phone call. From there, if you're getting title loans, you'll need to bring your driver's license, lien-free vehicle title, and your vehicle to either a car title loans near me or another location.
If you're acquiring payday loans, make sure you bring your photo ID, pay stub, a blank check from an active checking account, and your bank statement to the store. You could get your money the same day if you are approved for either loan.
Now That You Know If Loans Affect Your Mortgage
With all this information, you should be able to answer your “does having loans affect getting a mortgage?” question. Knowing this information about your mortgage and loans can really help you decide what your next step should be. If you decide title loans or payday loans can help you, fill out our online form today to get started.