If you apply for a £20k loan and get rejected...

Doooford

...I told a frield that I'd ask on here for them over some things she is struggling to work out.

In short, in 2 years time she wants to borrow £16000 for a mortgage (to get 20%) as a standard bank loan. She needs £4000 now to cover a rental deposit and fees as well as getting a new car.

Would it be better to borrow £4000 now, pay it off in two years and then get a £16000 loan after this. Or, just to borrow the full amount now so less credit file searches.

She has no credit history but a steady healthy flow of money through her bank account.

If she applied for a £20000 loan now and got rejected, could she still apply for £4000 say a month later and still have a good chance of getting it?

KingElvis

With no history there's no chance of a 20k loan, none.

If I also understand you, you're talking about borrowing money for a house deposit? also not allowed by anyone.

paddyrg

The reason you can't get 100% mortgages is because lenders need to secure their investments and know they can get their cash back. So a £20k loan would also need to be secured, but on an asset that's already as leveraged as it can be, so is not allowed. If your friend has awesome cashflow, she needs to stop it flowing and start to pile up in a savings account somewhere! Sometimes we just can't afford to do everything we want - she may need to sacrifice that car if she wants a deposit...

Doooford

Exactly what I was thinking, thanks for the confirmation though.

Doooford

Thanks paddyrg, could I just clarify that when I said healthy, I didn't mean awesome, I meant that it was in credit. Maybe in this day and age that is awesome

paddyrg

Heh heh, I was just inferring that cashflow not dipping iinto the red is great, but if she's not in a position to save £x00/month, the loan payments would be a big stretch!

Hope she finds what she needs, but I suspect what she needs and what she wants may not overlap 100% :-)