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    • StevenB12
    • By StevenB12 5th Nov 17, 4:00 PM
    • 37Posts
    • 4Thanks
    StevenB12
    Need some loan advice, please
    • #1
    • 5th Nov 17, 4:00 PM
    Need some loan advice, please 5th Nov 17 at 4:00 PM
    Hey everyone

    About 2 years ago I got a loan for 7.5K, paying back 247 a month which has 2 years left to run more or less (2020).

    As the usual happens things come up and circumstances change, basically in a year I'm going to be going for a mortgage, also need a new car etc. Was looking at a loan for about 18K, luckily my credit score is good so I got some good offers for monthly payments, about 340 a month. My current loan want 6K settlement figure, is it worth getting a bigger loan, paying off my current loan?

    Ive spoken to a mortgage advisor and my current loan wasn't impacting on any forthcoming mortgage, but obviously taking on two loans at a time will, hence this is why I don't want to be looking at a car on finance..

    Any advice is greatly appreciated, thank you
Page 1
    • zippygeorgeandben
    • By zippygeorgeandben 5th Nov 17, 4:21 PM
    • 707 Posts
    • 882 Thanks
    zippygeorgeandben
    • #2
    • 5th Nov 17, 4:21 PM
    • #2
    • 5th Nov 17, 4:21 PM
    How long is the new loan you are looking at spread over?
    End Sep 2016 End Oct 2017
    £8236.57 £0
    (Tesco 4.8%) £0pcm
    £6185.75 £0(Zopa 4.0%) £0pcm

    £5344.50
    £2610.04 (Sainsburys 0% until 06/19) £140pcm
    £2000.00 £1066.69 (Sister 0%) £133.33pcm

    Total debt
    £19.766.82 £3676.73 Original DFD May 2019.
    • bris
    • By bris 5th Nov 17, 4:57 PM
    • 7,029 Posts
    • 6,028 Thanks
    bris
    • #3
    • 5th Nov 17, 4:57 PM
    • #3
    • 5th Nov 17, 4:57 PM
    Your figures don't make sense, 2 years ago your loan was 7.5k and in that time you have repaid nearly 6k yet you still have 6k left as a settlement figure?
    • StevenB12
    • By StevenB12 5th Nov 17, 8:28 PM
    • 37 Posts
    • 4 Thanks
    StevenB12
    • #4
    • 5th Nov 17, 8:28 PM
    • #4
    • 5th Nov 17, 8:28 PM
    Probably be looking at spreading it over 4 years
    • StevenB12
    • By StevenB12 5th Nov 17, 8:30 PM
    • 37 Posts
    • 4 Thanks
    StevenB12
    • #5
    • 5th Nov 17, 8:30 PM
    • #5
    • 5th Nov 17, 8:30 PM
    High interest rate as it was a first time loan

    247 per month over 4 years = 11856
    • DCFC79
    • By DCFC79 5th Nov 17, 11:19 PM
    • 30,266 Posts
    • 19,146 Thanks
    DCFC79
    • #6
    • 5th Nov 17, 11:19 PM
    • #6
    • 5th Nov 17, 11:19 PM
    High interest rate as it was a first time loan

    247 per month over 4 years = 11856
    Originally posted by StevenB12
    Or not because a first time loan but a sketchy credit file or maybe dafaults.
    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.
    • Nebulous2
    • By Nebulous2 6th Nov 17, 3:05 AM
    • 1,625 Posts
    • 986 Thanks
    Nebulous2
    • #7
    • 6th Nov 17, 3:05 AM
    • #7
    • 6th Nov 17, 3:05 AM
    How much do you earn? How much do you expect to borrow for a mortgage? What deposit will you have? What did your adviser say about a bigger loan?

    We really can't tell without more information, but for any young person of my acquaintance I'd be advising there is a choice between a car or a house.
    • StevenB12
    • By StevenB12 6th Nov 17, 6:12 AM
    • 37 Posts
    • 4 Thanks
    StevenB12
    • #8
    • 6th Nov 17, 6:12 AM
    • #8
    • 6th Nov 17, 6:12 AM
    No. As I said this was a first time loan , I had no defaults on any payments as I never had any payments previously to make on anything , my credit score would have been average at the time as I had no credit cards no loans etc, this was basically my first financial commitment
    • StevenB12
    • By StevenB12 6th Nov 17, 6:16 AM
    • 37 Posts
    • 4 Thanks
    StevenB12
    • #9
    • 6th Nov 17, 6:16 AM
    • #9
    • 6th Nov 17, 6:16 AM
    I make about 21K per year before tax, plus any overtime, I'll have about 11K to put into a deposit (will also be a joint application with girlfriend ) probably looking at borrowing 120K for the mortgage , the loan I have now had little to no effect on mortgage application based on it being a joint application with both incomes, and I very much agree between car and house but my job involves a lot of travel so it also comes down to needing that car to provide the means of getting the house
    • Lungboy
    • By Lungboy 6th Nov 17, 7:01 AM
    • 1,105 Posts
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    Lungboy
    I'd have thought an £18K loan on a £21K salary was unlikely, even without another loan on the go.
    • StevenB12
    • By StevenB12 6th Nov 17, 7:21 AM
    • 37 Posts
    • 4 Thanks
    StevenB12
    Already been approved for a few, borrowing 18K over 4 years you're basically borrowing 18K to 84K , pulling out about 1500 per month after tax, take away about 350 per month, would still leave me with more or less basic wage so getting approved for it hasn't been the issue
    • bazzyb
    • By bazzyb 6th Nov 17, 7:38 AM
    • 1,040 Posts
    • 3,194 Thanks
    bazzyb
    Getting a personal loan for 85% of your income is unlikely to happen, especially when you have existing borrowing. This would also significantly affect your ability to get the mortgage you are looking for with such a large unsecured debt.

    As an aside, please let me know who has approved you for a loan already at less than 0% APR as I am very interested. £18k over 48 months even at 3.5% would be over £400 per month so I have no idea where you are getting your figures from?
    • DCFC79
    • By DCFC79 6th Nov 17, 8:14 AM
    • 30,266 Posts
    • 19,146 Thanks
    DCFC79
    I'd have thought an £18K loan on a £21K salary was unlikely, even without another loan on the go.
    Originally posted by Lungboy
    I completely agree.
    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.
    • StevenB12
    • By StevenB12 6th Nov 17, 9:58 AM
    • 37 Posts
    • 4 Thanks
    StevenB12
    None are 0% Apr. My current bank Lloyd's will offer me it for 389 a month. Bearing in mind at the minute my only financial commitment as far as debt goes is my current loan , since this loan will pay off my existing loan you need to remember that again it's only going to be the one loan per month, yes I'll have two at the time of taking this one out but one will be getting paid off, that's why advisor at Lloyd's has approved it if I want to go ahead with it


    To break it down my financial commitments currently per month are

    Loan - 247
    Rent - 200
    Shopping - 100
    Fuel - 100

    On average at the end of every month I'm left with about 780/800 clear after bills. Wiping out the first loan I'm only going to be paying say an extra 150 , as I said since our wages are combined as to what is paid per month it makes it a bit easier

    With my current loan and everything taking into account mortgage wise we are being offered up to 167K for the two of us.
    • Candyapple
    • By Candyapple 6th Nov 17, 11:34 AM
    • 2,472 Posts
    • 1,848 Thanks
    Candyapple
    None are 0% Apr. My current bank Lloyd's will offer me it for 389 a month. Bearing in mind at the minute my only financial commitment as far as debt goes is my current loan , since this loan will pay off my existing loan you need to remember that again it's only going to be the one loan per month, yes I'll have two at the time of taking this one out but one will be getting paid off, that's why advisor at Lloyd's has approved it if I want to go ahead with it

    To break it down my financial commitments currently per month are

    Loan - 247
    Rent - 200
    Shopping - 100
    Fuel - 100

    On average at the end of every month I'm left with about 780/800 clear after bills. Wiping out the first loan I'm only going to be paying say an extra 150 , as I said since our wages are combined as to what is paid per month it makes it a bit easier

    With my current loan and everything taking into account mortgage wise we are being offered up to 167K for the two of us.
    Originally posted by StevenB12

    If you take out an £18k loan and are looking to apply for a mortgage in the near future, that amount will most definitely affect your affordability calculations and how much the bank would be willing to offer.

    Have you actually spoke to a mortgage broker and run the figures through with them?

    If you are looking at taking out a £18k loan and £6k of that will be used to clear your existing loan, is the remaining £12k to be spent on a car? Can you not lower your expectations and go for a cheaper model?
    I'm a Board Guide on the Credit Cards, Loans, Credit Files & Ratings boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views are mine and not the official line of moneysavingexpert.com
    • Herzlos
    • By Herzlos 6th Nov 17, 11:40 AM
    • 5,956 Posts
    • 5,417 Thanks
    Herzlos
    If you're looking at getting a mortgage, I'd be spending a lot less on the car* (£4k rather than £12k). I'd probably also take it from the savings rather than borrowing for it, since presumably you're putting your spare £800/month into savings, it means you'll be back where you started in 5 months.

    I can't understand how with a £2k balance you've got a £6k settlement figure. That's pretty much the remaining payments. Did you get a settlement figure from the loan provider? What kind of loan is it?

    *Or keeping your current car until you've bought the house and settled in financially - houses cost so much more than just the mortgage.
    Last edited by Herzlos; 06-11-2017 at 11:42 AM.
    • StevenB12
    • By StevenB12 6th Nov 17, 12:36 PM
    • 37 Posts
    • 4 Thanks
    StevenB12
    Basically when I got my first loan it was for this car and a bit of work to the house and a holiday , it's my cousins house that we currently rent but about a week after I got the loan he decided to sell but has gave us about 2 years from now more or less to get a mortgage sorted , I've also gone into a better paid job since but my current car has poor mpg as all this was bought and done before job change etc , any car I get now I'm looking at paying more as I want a newer car that's going to last a good 7/8 year at least .

    As for the loan the loan was for 7.5K but it was paying back almost 11/12K like I said it was a first time loan so I had no credit history virtually before this so it was high interest , I've basically paid 5/6K back and the remaining balance is 2 years worth left
    • StevenB12
    • By StevenB12 6th Nov 17, 12:43 PM
    • 37 Posts
    • 4 Thanks
    StevenB12
    The mortgage advisors I've spoke to have gone over what my monthly costs are currently and what I make , like I said my basic salary is 21K but overtime can bump that up to 23/24K a year. So as before let's say Max I get this loan and I pay 400 per month back , my monthly costs are going to be about 700 per month that's for loan , shopping etc , that leaves me with about 700/800 spare, pus my other half's income which is anywhere from 1200/1300 so round it to £2000 left a month, the mortgage we were offered was 640 a month with 11K going as a deposit , the entirety of household bills for everything that was worked out came to about 440 which was leaving us about 930 or so a month clear
    • StevenB12
    • By StevenB12 6th Nov 17, 12:46 PM
    • 37 Posts
    • 4 Thanks
    StevenB12
    I'll add the 440 was not including shopping, but covered gas, electric, home insurance and the rest
    • Candyapple
    • By Candyapple 6th Nov 17, 12:57 PM
    • 2,472 Posts
    • 1,848 Thanks
    Candyapple
    The mortgage advisors I've spoke to have gone over what my monthly costs are currently and what I make , like I said my basic salary is 21K but overtime can bump that up to 23/24K a year. So as before let's say Max I get this loan and I pay 400 per month back , my monthly costs are going to be about 700 per month that's for loan , shopping etc , that leaves me with about 700/800 spare, pus my other half's income which is anywhere from 1200/1300 so round it to £2000 left a month, the mortgage we were offered was 640 a month with 11K going as a deposit , the entirety of household bills for everything that was worked out came to about 440 which was leaving us about 930 or so a month clear
    Originally posted by StevenB12

    That's all well and good, but have you actually asked your broker what the bank would lend you if you took on this new £18k loan?

    The new mortgage affordability checks stress test you based on interest rates going up to 8% so yes whilst you are saying currently you would have £930 spare, if you don't pass the affordability checks, you won't be able to get a mortgage.

    http://www.telegraph.co.uk/personal-banking/mortgages/bank-england-tightens-mortgage-rules-means/

    I'm actually quite surprised Lloyds have said they would be willing to loan you £18k when you currently only earn £21k and already have £6k left on an outstanding loan. Granted you said you are going to clear the outstanding loan debt, but the bank don't know that, and they are willing to give you £18k unsecured loan!

    If you do go ahead with the bank application, can you please post back here what APR they gave you and how much the final amount was for please as it will be helpful for others who may find themselves in a similar situation.
    Last edited by Candyapple; 06-11-2017 at 1:04 PM.
    I'm a Board Guide on the Credit Cards, Loans, Credit Files & Ratings boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views are mine and not the official line of moneysavingexpert.com
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