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  • FIRST POST
    • siowenson
    • By siowenson 9th Jan 18, 5:40 PM
    • 109Posts
    • 46Thanks
    siowenson
    3.1% turned into 9.9% with AA
    • #1
    • 9th Jan 18, 5:40 PM
    3.1% turned into 9.9% with AA 9th Jan 18 at 5:40 PM
    I was looking to take out a 25k loan to convert my bungalow's loft into two rooms because I have a new baby coming in august and could do with the extra space.


    As per the title, the advertised rate was 3.1% but after the application it has jumped to 9.9%. I earn 70k pa, my mortgage is 750pm and I pay 450pm to two CC's totalling 13k. I paid off a 15k car loan last Sept and thought I'd get another loan no problem so I'm guessing it is because I have so much on my CC's.


    I'm wary of making any other loan applications because I'm worried it will affect my credit score. After how many applications does it make a noticeable difference? Should I pay off a bit more of my CC's while I'm having drawings made up and waiting for planning permission or should I pursue more lenders now?
Page 1
    • zx81
    • By zx81 9th Jan 18, 5:45 PM
    • 14,858 Posts
    • 15,685 Thanks
    zx81
    • #2
    • 9th Jan 18, 5:45 PM
    • #2
    • 9th Jan 18, 5:45 PM
    Try one more now, then leave it a couple of months if you don't get a better result.

    You have a decent income, but you're asking for large amount, in addition to you existing debts. Do you have any savings at all you can use to clear the debts?

    If you don't have savings, how will you be able to make the additional loan payments?

    Remember to ignore your credit score.
    • siowenson
    • By siowenson 9th Jan 18, 5:52 PM
    • 109 Posts
    • 46 Thanks
    siowenson
    • #3
    • 9th Jan 18, 5:52 PM
    • #3
    • 9th Jan 18, 5:52 PM
    Are there any lenders that you could recommend that are more likely to offer a more reasonable deal? Even if it isn't the 3%, I'd be happy with 5%.
    • zx81
    • By zx81 9th Jan 18, 5:55 PM
    • 14,858 Posts
    • 15,685 Thanks
    zx81
    • #4
    • 9th Jan 18, 5:55 PM
    • #4
    • 9th Jan 18, 5:55 PM
    Try the eligibility checker on this site to see what options comes up.
    • DCFC79
    • By DCFC79 9th Jan 18, 6:01 PM
    • 30,594 Posts
    • 19,350 Thanks
    DCFC79
    • #5
    • 9th Jan 18, 6:01 PM
    • #5
    • 9th Jan 18, 6:01 PM
    Are there any lenders that you could recommend that are more likely to offer a more reasonable deal? Even if it isn't the 3%, I'd be happy with 5%.
    Originally posted by siowenson
    Thats highly impossible, its a case of pick a lender and go, check the eligibility checker as zx81 says.
    Can people stop loaning money/being a guarator to family/friends, it rarely ends well and you lose out as your money is gone or you get shafted with being a guarantor.
    • siowenson
    • By siowenson 9th Jan 18, 6:03 PM
    • 109 Posts
    • 46 Thanks
    siowenson
    • #6
    • 9th Jan 18, 6:03 PM
    • #6
    • 9th Jan 18, 6:03 PM
    AA was the highest at 95%.


    Post office 95%


    Tesco 80% - The loan I paid off last year was with Tesco, maybe they would be more likely to loan at a good rate?


    Sainsbury's at 70%


    RBS 80% - I bank with RBS
    • SuperHan
    • By SuperHan 9th Jan 18, 6:21 PM
    • 2,023 Posts
    • 1,178 Thanks
    SuperHan
    • #7
    • 9th Jan 18, 6:21 PM
    • #7
    • 9th Jan 18, 6:21 PM
    As others have said, it's impossible to know.


    The advertised rate just means that 50% of applicants get that rate. Which means no lender is more likely than others to give the advertised rate (or it would be very difficult to ascertain if that were the case), as if more people were getting lower rates they would reduce their advertised rate.


    Your best chanced are with the higher scores on the eligibility checker, but that is by no means in any way a concrete indicator.


    You'll just have to pick and see.
    • Voyager2002
    • By Voyager2002 9th Jan 18, 6:56 PM
    • 11,809 Posts
    • 8,003 Thanks
    Voyager2002
    • #8
    • 9th Jan 18, 6:56 PM
    • #8
    • 9th Jan 18, 6:56 PM
    If it is any consolation, you are unlikely to need the extra room until the baby is about 2 or 3. So see if you can pay down some of those debts, obviously get the drawings and planning permission, and see what is possible a little further down the road.

    And have you tried borrowing from a peer-to-peer lender?
    • siowenson
    • By siowenson 10th Jan 18, 7:30 AM
    • 109 Posts
    • 46 Thanks
    siowenson
    • #9
    • 10th Jan 18, 7:30 AM
    • #9
    • 10th Jan 18, 7:30 AM
    If it is any consolation, you are unlikely to need the extra room until the baby is about 2 or 3. So see if you can pay down some of those debts, obviously get the drawings and planning permission, and see what is possible a little further down the road.

    And have you tried borrowing from a peer-to-peer lender?
    Originally posted by Voyager2002
    I'm in a 2 bed with 2 kids already! The baby will obviously sleep in my room for the first 6 months anyway so I suppose so that will give me until February next year.
    • Herzlos
    • By Herzlos 10th Jan 18, 12:27 PM
    • 6,298 Posts
    • 5,685 Thanks
    Herzlos
    As per the title, the advertised rate was 3.1% but after the application it has jumped to 9.9%. I earn 70k pa, my mortgage is 750pm and I pay 450pm to two CC's totalling 13k. I paid off a 15k car loan last Sept and thought I'd get another loan no problem so I'm guessing it is because I have so much on my CC's.
    Originally posted by siowenson
    £70k is in the region of £5800/month after tax. You've got £1200 going out in mortgage/debt, so what's happening to other £4600?

    The poor rate is potentially because with a huge salary, you're still needing to borrow such a large amount.

    Maybe you need to try different repayment terms, or just take the 9.9% and refinance later when you're in a better position.

    Can you reduce the conversion expense by going for something simpler? £25k to split a room in 2 seems like a lot, or are you looking at roof line adjustments etc?
    • haras_nosirrah
    • By haras_nosirrah 10th Jan 18, 1:00 PM
    • 1,366 Posts
    • 2,538 Thanks
    haras_nosirrah
    how about a mortgage additional borrowing for that much money - rate will be much lower than the 9.9%
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • pmartin86
    • By pmartin86 10th Jan 18, 1:57 PM
    • 472 Posts
    • 258 Thanks
    pmartin86
    £70k is in the region of £5800/month after tax. You've got £1200 going out in mortgage/debt, so what's happening to other £4600?
    Originally posted by Herzlos
    Wouldn't it be lovly to live in a world without tax??
    • Tarambor
    • By Tarambor 10th Jan 18, 2:11 PM
    • 1,927 Posts
    • 1,375 Thanks
    Tarambor
    Still £2800 left after tax and mortgage/debt.
    • vacheron
    • By vacheron 10th Jan 18, 2:13 PM
    • 753 Posts
    • 666 Thanks
    vacheron
    Wouldn't it be lovly to live in a world without tax??
    Originally posted by pmartin86
    LOL, My thoughts entirely.

    After pension contributions, sharesave deductions tax and NI, my current net salary is less than 40% of my gross.

    I'd hope at 70K the OP would be making some significant pension contributions to keep their 40% tax element in check.
    Last edited by vacheron; 10-01-2018 at 2:15 PM.
    • The rich buy assets.
    • The poor only have expenses.
    • The middle class buy liabilities they think are assets.
    Robert T. Kiyosaki
    • ReadingTim
    • By ReadingTim 10th Jan 18, 3:06 PM
    • 2,279 Posts
    • 3,233 Thanks
    ReadingTim
    £70k is in the region of £5800/month after tax. You've got £1200 going out in mortgage/debt, so what's happening to other £4600?
    Originally posted by Herzlos
    No, it really isn't.

    £5,800/month is the figure before tax, the figure after income tax and NI is about £4,000. Of that, the OP only mentions mortgage and CC repayment as outgoings, omitting council tax, gas, water, electricity, phone (landline or mobile), internet, road tax, fuel, car maintenance,car insurance, buildings insurance, contents insurance. They may have health or dental insurance, sky tv, trade union subs, gym membership, plus might occasionally need to buy food or clothes.

    Suggest that's where quite a lot of the rest goes...
    • Herzlos
    • By Herzlos 10th Jan 18, 3:32 PM
    • 6,298 Posts
    • 5,685 Thanks
    Herzlos
    No, it really isn't.

    £5,800/month is the figure before tax, the figure after income tax and NI is about £4,000. Of that, the OP only mentions mortgage and CC repayment as outgoings, omitting council tax, gas, water, electricity, phone (landline or mobile), internet, road tax, fuel, car maintenance,car insurance, buildings insurance, contents insurance. They may have health or dental insurance, sky tv, trade union subs, gym membership, plus might occasionally need to buy food or clothes.

    Suggest that's where quite a lot of the rest goes...
    Originally posted by ReadingTim
    My bad, I just used a wage calculator and misread. Still, I pay all of that stuff from a post-tax salary of under half of that (2 kids in a 2 bed home as well), so the point still stands, just with a smaller number.

    Another thought; what were the repayment terms you were looking at? I saw a similar rate jump when I tried to pay over more than 60 months (5 years). You might be hitting something similar.
    Last edited by Herzlos; 10-01-2018 at 3:44 PM.
    • somethingcorporate
    • By somethingcorporate 10th Jan 18, 7:40 PM
    • 8,860 Posts
    • 8,563 Thanks
    somethingcorporate
    As others have said, it's impossible to know.


    The advertised rate just means that 50% of applicants get that rate. Which means no lender is more likely than others to give the advertised rate (or it would be very difficult to ascertain if that were the case), as if more people were getting lower rates they would reduce their advertised rate.


    Your best chanced are with the higher scores on the eligibility checker, but that is by no means in any way a concrete indicator.


    You'll just have to pick and see.
    Originally posted by SuperHan
    Successful applicants, not just applicants.
    Thinking critically since 1996....
    • colesy
    • By colesy 10th Jan 18, 7:55 PM
    • 55 Posts
    • 33 Thanks
    colesy
    £70k is in the region of £5800/month after tax. You've got £1200 going out in mortgage/debt, so what's happening to other £4600?
    Originally posted by Herzlos
    No it’s not. £70k works out at just over £4k pcm after tax.
    • siowenson
    • By siowenson 11th Jan 18, 3:19 PM
    • 109 Posts
    • 46 Thanks
    siowenson
    Good news: I tried Tesco this morning and they've offered me 24k over 5 years at 3.3%. The only adjustments I made were changing the loan from 25k to 24k and 6 years to 5.
    I can't believe I'm only paying back an extra 2k over the term. To say I'm happy is an understatement!
    • martynjwood
    • By martynjwood 12th Jan 18, 4:38 PM
    • 2 Posts
    • 0 Thanks
    martynjwood
    Issue with AA is that the APR changes after the hard check so it has already potentially affected your credit file/score by the time you know the APR has been upped. No other lender I looked at did this. APR changed after the soft search as part of eligibility checker on lenders website.

    Simples.... Do not use AA. Well 49% of you do not use AA, 51% will get the 3.0% APR.
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