Joint unsecured loan - to apply or not to apply

floreycl

Hi - am very new here but can't find decent advice anywhere.

My husband and I are looking to restructure our debt to make moving to a larger house (slightly larger mortgage) more affordable and move some credit cards on to stuctured repayment. Our bank (HSBC) turned us down for the loan though. Info as follows:

- want to borrow up to £25k (£8.5k credit card, £4.5k personal loan, £10.5k joint unsec loan with current bank, remainder to pay for work on new house) £825/month repayment
- looking to port current mortgage with bank £171k and borrow an additional £15k with 10% deposit - should hopefully just go through with current bank on current outgoings but will be referred
- earnings joint £69.5k pa (me £42.5k, husb £27k)
- one dependent, another on the way
- "good" credit rating according to Equifax (low good scores though around 450)

Scared to apply for loan and not sure where and think we are decided to now go for mortgage and then restructure rather than risk further decline affecting credit rating. Awaiting for reasons from HSBC but adviser just felt their lending tolerances have reduced over last couple of months, rather than a direct reflection on us?

Any advice at all on any aspect??? Wondering when to reapply and with whom - was considering Tesco and Sainsbury's but couldn't see if we could do joint app.

Thanks in advance

xxx

kerrypn

Could you post up an SOA? People can see the full picture to help you then http://www.makesenseofcards.com/soacalc.html

floreycl

Hi - thanks for that . Have completed and pasted below. As before, grateful for your advice. Heard back from HSBC today who confirmed nothing adverse on my report or their scoring, just that HSBC unwilling to take on outside lending.


Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 2758
Partners monthly income after tax....... 1785
Benefits................................ 80
Other income............................ 0
Total monthly income.................... 4623
Monthly Expense Details
Mortgage................................ 690
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 95
Electricity............................. 160
Gas..................................... 27
Oil..................................... 0
Water rates............................. 60
Telephone (land line)................... 25
Mobile phone............................ 50
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 300
Clothing................................ 40
Petrol/diesel........................... 250
Road tax................................ 16
Car Insurance........................... 40
Car maintenance (including MOT)......... 30
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 486
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 42
Buildings insurance..................... 41
Contents insurance...................... 0
Life assurance ......................... 30
Other insurance......................... 0
Presents (birthday, christmas etc)...... 35
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2439

Assets
Cash.................................... 4000
House value (Gross)..................... 192000
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 202000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 171000...(690)......1.5
Total secured & HP debts...... 171000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
HSBC Loan......................10500.....337.......7.69
Egg Loan.......................4500......220.......7.6
Egg credit cards...............8500......250.......17
Total unsecured debts..........23500.....807.......-

Monthly Budget Summary
Total monthly income.................... 4,623
Expenses (including HP & secured debts). 2,439
Available for debt repayments........... 2,184
Monthly UNsecured debt repayments....... 807
Amount left after debt repayments....... 1,377
Personal Balance Sheet Summary
Total assets (things you own)........... 202,000
Total HP & Secured debt................. -171,000
Total Unsecured debt.................... -23,500
Net Assets.............................. 7,500
Created using the SOA calculator at
Reproduced on Moneysavingexpert with permission, using IE browser.

CLAPTON

do you really have 1,377 spare each month...
if so you can clear the CC debts in 6 months
that leaves you with two loans at very reasonable APRs

whta's the problem?

floreycl

Hi - in short, no. Take off additional £270 for pension, couldn't see that there and also we were more cash-rich that we really appreciated before baby so never really that great at budgeting/saving/spreading costs, so monthly costs other than definite commitments are probably underestimated, so I would say it's nearer £8-900 i.e. £400/each. We feel we need to also take into account the following:
- mortgage on very low tracker rate at moment
- we will port this but it will increase to £770/m
- interest rates and mortgage will rise but plan to keep this mortgage for next 2 years or so because taking it to fixed rate is >£1000/month so plan to make some headway now and remortgage to fixed rate when % deposit/equity should be 15% or greater
- new baby on way = further £500 childcare costs + additional usual costs
- we have lump sum of savings but no regular contribution i.e. nothing to replace car, for emergencies, home improvements, holidays, nest egg or anything sensible which is one of the key reasons we still have so much debt as we didn't have a Plan in 1st instance
- and, as per initial post, new mortgage would also go through on affordability with the consolidation whereas now we know it will be referred (but hopefully according to mortgage manager likely to be approved)

Hope that makes more sense.

CLAPTON

there really is no substitute for proper budgeting

a mortgage of 770 per month on an income of 4,623 should be easily affordable

but you neeed to find out exactly where your money actually goes

redo the budget sheet, start keeping spending diaries (i.e write down absolutely everything you both spend and see how much just disappears)
go through the last six months CC statements and see what other things you are spending

then redo the budget sheet with the new insights and with the new 'post' second baby figures
it just maybe that holidays and home improvements aren't actually affordable for a year or so.

telboyo

Personally I would go saving crazy for the next 6 months-pay off the CC and use your £4k cash towards one of the other loans- if you really do need EMERGENCY fnds you can get the from the CC. This will release £470 from your current payments- then the lower earning partner gives up work saving 486 current child care plus anticipated £500 for next child.
This adds up to £1456 per month almost what the lower earning partner earns.
With 1 partner at home it is amazing how much money can be saved through better cooking and proper budgeting, because there will now be time. As there will not be that mad rush of getting to an from nursery the work days will much more enjoyable and incidental expenses will be much lower.
Also the kids will get much more parent time, which is a good thing as lids grow up and are gone before you know it and they will actually care about you- employers don't really care if you are there or not.