Can I get a mortgage if I have a loan?

Applying for a mortgage when you already have a loan

The time might be right for you to get a mortgage on a home, but you may be worried about the impact existing debts or personal loans might have on your chances.

For instance, you might have taken out a loan for a car, studies, or covering a big expense like a wedding, which is quite common.

The good news is yes, you can still get a mortgage if you have a loan. It’s more about how it fits into your overall finances.

Lenders will look at the size of your repayments, how long they’ll run for and whether you’ve kept up with repayments on time. 

Let’s explore what’s involved in more detail.

Does having a loan affect getting a mortgage? 

Yes, having a loan can affect getting a mortgage. When you apply for either, lenders look at whether you can afford to pay back what you borrow. In the case of a mortgage, lenders want to establish if you can comfortably manage the repayments on top of everything else you’re already paying, including any loans. 

Lenders usually look at: 

• Your income and how stable it is
• Your regular outgoings, including loan repayments
• Your credit history and how you’ve managed borrowing before

If your loan repayments take up a noticeable chunk of your income, this can reduce how much you’re able to borrow. In some cases, it can also limit what mortgage deals you can access.

Does the loan type matter? 

Yes, the loan type you have can make a difference when applying for a mortgage. 

Some loans, like car finance or student loans, are viewed as more manageable compared to others because they often have lower monthly payments. But lenders will always come back to the underlying question of whether you can comfortably afford a mortgage alongside everything else. 

Understanding the type of loan you have can help you prepare better and improve your chances of a smooth mortgage application.

Does having a loan affect mortgage renewal? 

Yes, having a loan can affect your mortgage renewal if you want to switch lender or renegotiate your deal. Lenders may look again at your circumstances and what other loans you have. 

If you’ve taken on a new loan since your last mortgage application, or if your repayments have increased, this can also affect what options you’re offered. 

If you stay with your existing lender and don’t borrow more, checks can often be lighter. But this might not always be the case. Remember, each lender will have their own criteria.

Can having a loan ever help your mortgage chances? 

Yes, sometimes having a loan may help with your mortgage application. It can show you’re able to manage credit responsibly and is good for your credit score. If you’ve made regular, on time repayments over several years, this gives lenders confidence you can manage medium- to long term borrowing commitments. 

But they’ll look at missed or late payments as a red flag. This will show up on your credit rating, which may have a negative effect on your mortgage application.

How to improve your chances before mortgage application 

If you already have a loan and you’re thinking about applying for a mortgage, a little forward planning can help make a real difference. 

Here are some things you can do in advance: 

Reduce what you owe 

• Paying off smaller loans can free up monthly income 
• Avoid taking on new borrowing shortly before your mortgage application 

Keep payments on track 

• Set up direct debits if you haven’t already 
• Always pay on time. Even one missed payment can raise questions 

Give yourself some borrowing breathing space 

• Lots of borrowing in a brief time can look suspicious 
• Allow time for your credit record to settle 

Check your credit report 

• Make sure your details are correct 
• Flag anything you don’t recognise early 

There’s more on why checking your record’s accurate in our guide to credit scores.

Does having loans affect how much I can borrow?

Yes, if you have an existing loan or loans when applying for a mortgage, these can affect your borrowing power, including:

• Maximum mortgage amount you can borrow
• Choice of deals
• The interest rates you’ll be offered
• The range of lenders you can choose from

Your monthly loan repayments are counted as regular outgoings, so this lowers what lenders view as your overall mortgage affordability. It’s why two people earning the same amount could be offered very different mortgage amounts, if one has loans and the other doesn’t. 

Remember it’s also a good idea to seek independent financial or mortgage advice before making a decision on whether you should take out a mortgage.

Key takeaways 

Having a loan doesn’t stop you getting a mortgage. What matters is whether you can afford the repayments and show you manage credit well.

• You can still apply and get a mortgage if you already have a loan 
• Lenders look at your affordability, not just the fact you have a loan 
• A new or existing loan can limit how much you can borrow and the deals you’re offered 
• In some cases, a well-managed loan can help if it shows you make repayments on time
• Clearing debts and keeping a strong credit record can improve your chances