What do banks consider a large loan?

enthusiasticsaver · 5 October 2016 at 10:34PM

Consolidating debt without addressing the reason for the overspending is a bad idea. This is not paying off your debts, it is just moving it from credit cards to loan so technically it is restructuring and will no doubt extend the term and overall cost of the debt due to paying it over a longer period. Are you spending more than you have coming in? If so, this is a slippery slope and best addressed sooner rather than later.

You presumably have a £245k mortgage which is more than 5 times your income (unless you have a partner) so having a further £10-£15k unsecured debt is ill advised. Have the credit cards built up through normal living expenses or can you pinpoint how they got up to £12K and are you paying more than the minimum payment on them? You do not need to read many diaries on this forum to realise that you are heading down a path to paying most of your salary out on paying back debt. I am assuming for that rate you are applying for a secured loan which is actually risking the roof over your head. Please think very carefully before proceeding.

essex.cyclist · 6 October 2016 at 8:06AM

Thanks for your concern, but it's not like that at all.

The debts have come about after spending a considerable amount of money on home improvement.

Not ideal, but it was the sort of project that once started, it was difficult to stop.

My wife earns good money and we comfortably afford the mortgage and other payments - my plan for the next 12 months is to hopefully use a loan to pay off a family loan, then pay off credit card debts over 12 months. In that time, I can comfortably afford the £180 p/month from my quarterly bonuses.

I c an see how debt can spiral but am convinced this would allow me to have an easier time paying it off, mainly because it allows me to spread my family loan over 5 years rather than trying to pay it off by next Spring.

poppasmurf_bewdley · 6 October 2016 at 11:45AM

I think the fact that you are 'looking' for a £10k loan but could 'manage' on £7.5/8k sort of sums up your management of money.

To have a salary of £45k but credit card debts of £12k and are £2k into a £2.5k overdraft shows you are living well beyond your means. You need to take control of that before even contemplating extra borrowing.

essex.cyclist · 6 October 2016 at 11:46AM

poppasmurf_bewdley wrote: »

I think the fact that you are 'looking' for a £10k loan but could 'manage' on £7.5/8k sort of sums up your management of money.

To have a salary of £45k but credit card debts of £12k and are £2k into a £2.5k overdraft shows you are living well beyond your means. You need to take control of that before even contemplating extra borrowing.

I think the fact that you draw a conclusion about my management of money like that sums you up.

I have control. As I have explained, this year has been particularly expensive because of a house renovation. That has now changed.

Thanks for your input though, really... er... helpful.

poppasmurf_bewdley · 6 October 2016 at 11:50AM

essex.cyclist wrote: »

I think the fact that you draw a conclusion about my management of money like that sums you up.

I have control. As I have explained, this year has been particularly expensive because of a house renovation. That has now changed.

Thanks for your input though, really... er... helpful.

Another one who gets all huffy puffy when someone says something they don't like, or hears an answer that doesn't suit them.

The fact that you say you want a loan of £10k but 'could reduce a little if needs be' illustrates your total inability to control money.

essex.cyclist · 6 October 2016 at 12:00PM

poppasmurf_bewdley wrote: »

Another one who gets all huffy puffy when someone says something they don't like, or hears an answer that doesn't suit them.

The fact that you say you want a loan of £10k but 'could reduce a little if needs be' illustrates your total inability to control money.

No it doesn't.

It shows that I could use the money because the low interest rate is preferable to the rate on credit cards.

If you find lots of people get 'huffy puffy' in response to you, maybe you should address how you write your messages, and the content of your messages.

I didn't ask for anyone's view on how I manage my money, so quite why you felt the need to tell me your view is beyond me.

Thrugelmir · 6 October 2016 at 12:04PM

essex.cyclist wrote: »

I think the fact that you draw a conclusion about my management of money like that sums you up.

The signs are all so predictable. All be seen so many times before. No one can tell what to do. However nothing will change unless you actually want to do something about it yourselves. Extending repayment of debt. Just means that there's extended window in which another financial event could have an impact. Also the novelty soon wears off. Easy to overspend on yet something else to get a buzz.

essex.cyclist · 6 October 2016 at 12:08PM

Thrugelmir wrote: »

The signs are all so predictable. All be seen so many times before. No one can tell what to do. However nothing will change unless you actually want to do something about it yourselves. Extending repayment of debt. Just means that there's extended window in which another financial event could have an impact. Also the novelty soon wears off. Easy to overspend on yet something else to get a buzz.

Thanks for your input, but you're way off the mark.

jamesperrett · 6 October 2016 at 12:19PM

essex.cyclist wrote: »

It shows that I could use the money because the low interest rate is preferable to the rate on credit cards.
.

I ran up a similar amount of debt on credit cards for a similar reason. But the difference was that I already had decent lifetime rates on those cards and I wanted more flexibility in repaying the money than I would get from adding more to the mortgage. At that time, the credit cards were the cheapest way of borrowing.

If you are credit worthy you should be able to make use of the extremely good balance transfer offers available which would allow you to continue to borrow that money at a much lower rate.

essex.cyclist · 6 October 2016 at 12:25PM

jamesperrett wrote: »

I ran up a similar amount of debt on credit cards for a similar reason. But the difference was that I already had decent lifetime rates on those cards and I wanted more flexibility in repaying the money than I would get from adding more to the mortgage. At that time, the credit cards were the cheapest way of borrowing.

If you are credit worthy you should be able to make use of the extremely good balance transfer offers available which would allow you to continue to borrow that money at a much lower rate.

Thanks for the comment.

I would agree, but my primary reason for the loan is to pay off a family loan where my parents could do with the money by next Spring.

Doing so would allow me to pay off my credit cards from standard income, with the loan payments coming out of my bonuses.

Unfortunately my bonuses are not big enough to pay off my family loan by next Spring and it's causing me difficulty with my regular income.

I have a very clear plan in my mind and have had no problem clearing debt and saving money previously.

What do banks consider a large loan?

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