3.1% turned into 9.9% with AA

siowenson
siowenson Posts: 116 Forumite
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in Loans
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?
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Comments

  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    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
    siowenson Posts: 116 Forumite
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    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%.
  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    Try the eligibility checker on this site to see what options comes up.
  • DCFC79
    DCFC79 Posts: 40,598 Forumite
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    siowenson wrote: »
    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%.

    Thats highly impossible, its a case of pick a lender and go, check the eligibility checker as zx81 says.
  • siowenson
    siowenson Posts: 116 Forumite
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    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
    SuperHan Posts: 2,269 Forumite
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    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
    Voyager2002 Posts: 15,277 Forumite
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    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
    siowenson Posts: 116 Forumite
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    Voyager2002 wrote: »
    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?

    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
    Herzlos Posts: 14,685 Forumite
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    siowenson wrote: »
    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.

    £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
    haras_nosirrah Posts: 2,208 Forumite
    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.
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