Example: Paul's car loan
Paul Smith is 32 years old and planning to buy his first home. He earns $60,000 p.a. working as a business consultant. He has no partner or dependents, 1 credit card with a limit of $5,000, cleared every month and recently took out a car loan of $30,000 with repayments of $608 per month over 5 years. Paul's monthly living expenses are $1,800.
He has been able to save $50,000 to put towards his first home.
Based on this scenario, Paul's maximum borrowing power with a Big Four lender is $211,000.
If Paul did not have a car loan, his maximum borrowings would be $301,000, an additional $90,000.
Note: The borrowing power can differ with each lending institution and approval is subject to the overall strengths of the application. The assessment rate used is 7.25% p.a.
* This is a fictional, but realistic, example.
Hello i have had bad credit but got a loan to buy a car to show that i can pay and get my credit good again but i rent a house and pay child support i have a full time job for 8 years now prob make between 55 and 64 000 a year but seem to be paying alot of money for nothing and would rather be paying a house of for myself so i can see where my money s going i dont have much in savings but would like to know if i could refinance my car loan and get a house loan and pay one payment is this possible
Hi Jason,
Thanks for your inquiry
I’m afraid it is not possible to combine your car loan and home loan into one payment. Ultimately, the decision comes down to you. If you’d rather be free of debt sooner and are willing to forego a few extra bucks by doing so, pay off your smallest loan first, which is likely your auto loan.
Hope this information helps
Cheers,
Arnold
I want to take a car loan on my father and emi paid by me as i am not directly eligible for the loan on me. My father want to take a house loan.. does our car loan affect house loan amount .. i kw it does.. but as emi’s are paid by me..will there be any chance for full eligibility
Hi Lokesh,
Thanks for your question.
Each lender has their own set of lending criteria which borrowers must meet in order to qualify for a home loan. Generally, they will assess your serviceability by looking at your assets, income and even other liabilities. In the event that may still consider your home loan even if you still have a current car loan, it will most likely affect and reduce your expected home loan amount. I would suggest that you contact the lender first and discuss your loan options with them.
Cheers,
May