New FCA rules allow mortgage borrowers with car payments to qualify for thousands more

Drivers looking to upgrade their car may now qualify for thousands more on their mortgage. Recent changes in how lenders assess affordability means new car payments don’t make the same dent to borrowing as they did six months ago.

In March, a single buyer – earning the average UK salary – would see their mortgage borrowing cut by over £18,000 if they had a £345 car payment. Now that same car payment takes just £5,000 off their maximum borrowing, allowing them to borrow nearly £13,000 extra for their home.

Joint buyers – both earning the average salary - would have seen their maximum borrowing cut by over £13,000 in March if they each had a £345 car loan. Now their borrowing will be reduced by £5,677.

The shift follows updated guidance from the FCA which gives lenders more flexibility in their affordability assessments. The FCA’s reforms are part of a wider strategy to make homeownership more accessible.

Jonathan Stinton, head of mortgage relations at Coventry Building Society, said: “Just a few months ago, a typical car payment could stall borrowing power by over £18,000 - that could mean compromising on space, location, or putting the brakes on your move altogether. Now, thanks to regulatory changes which allowed lenders to change how they assess affordability, that impact has dropped to around £5,000. It’s a big shift, and it gives borrowers more flexibility to balance lifestyle choices like car ownership with their homebuying goals.

“That said, a car payment still affects how much you can borrow — it’s just not the deal-breaker it used to be. Whether you’re buying your first home or looking to remortgage, it’s worth taking a moment to understand how your monthly commitments shape your options. These changes give borrowers more flexibility, but making informed decisions is still key.”