As well as assessing your credit report, mortgage lenders will check your recent bank statements to get a solid idea of your regular outgoings.
This is to ensure you can afford to meet your monthly mortgage repayments. If you’re spending £100 a month on car finance repayments, this reduces your spending power in the eyes of lenders. Other regular payments such as car insurance, petrol and maintenance costs will also be considered.
If you can afford to pay the remainder of the debt in full or wait until you’ve paid all your installments, it could benefit your application to do so.
Lenders place a lot of weight on your “debt to income ratio”, so it’s useful to have as little debt as possible when you apply for a mortgage.