Buying a car on finance can affect the amount a bank will lend you on a mortgage -and new research has revealed by just how much.
As a regular financial commitment, a personal contract purchase or PCP deal will be taken into account when applying for a new home loan or remortgaging.
This is because it affects how much the borrower can can afford to repay on their mortgage every month.
Now, Coventry Building Society has crunched the numbers to work out exactly how much the latest models of car could hit someone's borrowing power.
Looking at a 2025 plate Ford Puma, the UK's most popular car in 2024, it said a single homebuyer earning the average salary could reduce their maximum mortgage borrowing by £18,423 if they took out a finance agreement.
This is based on the average affordability assessment taken from across the 10 biggest lenders in the UK.
Drivers upgrading their wheels this month could dent their borrowing prospects, according to analysis from Coventry Building Society
For those buying a new home it might mean waving goodbye to an extra bedroom, or opting for somewhere a bit smaller.
Coventry's calculation is based on a £345 monthly agreement for a Ford Puma over 36 months - a recent offer available on Ford's website.
Joint buyers, both earning the average salary, could borrow £13,205 less if they each had an additional £345 outgoing on their own car, according to Coventry's analysis.
For those looking to drive a new Kia Sportage - the UK's second most popular car last year - this would mean a monthly PCP payment of around £397.
This could reduce maximum mortgage borrowing by £24,548 for single homebuyers, and £20,611 for joint homebuyers if they both had a similar car payment, according to Coventry.
The building society has warned that anyone intending to buy a property this year need to seriously consider the implications of a taking a car finance deal.
The maximum amount people can borrow on a mortgage is ultimately limited by lender's affordability checks and the fact that most people are restricted to borrowing no more than 4.5 times their gross annual salary.
This means, for example, that someone earning £40,000 can typically borrow no more than £180,000 on a mortgage.
However, car finance will be considered as a fixed outgoing by lenders and will therefore be deducted from a person's income.
Jonathan Stinton, head of mortgage relations at Coventry, said: 'Going to buy a brand-new car can be exciting, but before signing the deal it's worth knowing what the extra outgoing can mean for your mortgage.
'Our research of the top ten lenders' affordability shows a car payment of £345 could hamper borrowing by over £18,000, which - if you're looking for a new home - could mean compromising on an extra bedroom, or more square footage, or having to save for longer to make up the difference.
'Even if you don't have immediate plans to move it's worth remembering that when it comes to remortgaging lenders still need to make sure your mortgage is affordable, so a new car payment could really limit your options.
'It's not to say people shouldn't have a new car if they want one, it's to let them know the potential implications in advance so they can do their research and make the choice which is right for them.'
Mortgage rates have risen substantially over recent years, meaning that those remortgaging or buying a home face higher costs.
That makes it even more important to search out the best possible rate for you and get good mortgage advice.
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