APR madness!

edited 30 November -1 at 1:00AM in Loans
20 replies 1.7K views
KingBeastieKingBeastie Forumite
6 Posts
edited 30 November -1 at 1:00AM in Loans
Hi all, just looking for a bit of advice/opinions on a loan quote I was offered.
My situation is that I asked my own bank (Santander) for a loan of £10000. This money is for a deposit for a flat as I am looking to move, I said on the application that this was for a new car. However the APR was 16.7% meaning over 5 years I would pay back around £14440 (can't remember actual amount, I do not have the document in front of me right now). There is no way I am accepting that loan. If the total repayable was £12500 maximum I would have accepted it but anymore than that - no way!
I can afford the repayments but like I said I refuse to pay back nearly 50% of what I am borrowing. My credit history is good so I am wondering if people think I would be likely to get a better rate elsewhere?
I earn £30,000 p.a and can afford the repayments. My current mortgage is with HSBC and I would be able to move to a different mortgage with them but not also get a loan for a deposit.

I appreciate I am very likely to get many replies right now saying "do not take out a loan just save up..." and I thank you for your concern but this is something I have considered very carefully and is not the question that I am asking. I will not take out a loan unless I am happy with it, does anyone have experience of better/good lenders that they can recommend to someone in my situation? If you need further info just ask.

Thanks for your help.
Steve
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Replies

  • haras_nosirrahharas_nosirrah Forumite
    2.2K Posts
    ✭✭✭✭
    I think HSBC will decline to move your mortgage if you get a loan for the deposit.

    Even having an application for credit will impact your score.
    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.
  • You are advocating fraud - lying on your loan application and no doubt lying about the source of deposit when you come to apply for a new mortgage.

    This forum should not endorse such activity.
    Thinking critically since 1996....
  • tonkinatortonkinator Forumite
    103 Posts
    Have you popped your details into moneysupermarket, or a similar site and seen what they suggest you may be able to get.

    To be fair, it's rare comparison sites give you the rates you'll actually get, but worth having a quick look.

    Have you ever missed any payments in the last 6 years, or all up to date with everything?

    That does seem quite steep for someone with a good credit history, earning £30K, but if you have other unsecured debt, as well as your mortgage, that could be part of the reason.

    Remember, the 7% rates you see advertised by the banks are a carrot that only a lucky few can get, the rest of us get lumbered with higher rates. I recently got offered the best rate from Sainsbury's, they gave me £3500 @ 14.6%. My own bank offered a higher APR than that.
  • TixyTixy Forumite
    31.5K Posts
    ✭✭✭✭✭
    Have you spoken to your potential new mortgage lender about borrowing part of the deposit? They are very unlikely to accept that - and regardless of what you say its for they will be very wary if they see you taking out a new loan shortly before buying a new property.
    Many many people have had mortgage offers revoked by taking out such borrowing.

    Aside from that 16.7% isn't a horrendous APR in the current financial climate (although obviously its very much dependant on an individuals circumstance and credit file). If you want to pay back less as an overall amount then the answer could be to take the loan over a shorter period.

    Or you could try another bank - you might be offered a slightly better APR, difficult for anyone to say without knowing your full info.
    A smile enriches those who receive without making poorer those who give
    or "It costs nowt to be nice"
  • tonkinatortonkinator Forumite
    103 Posts
    Also, just re-read the bit about purpose of loan.

    Don't BS them. Bad idea, asking for trouble.

    I'vbe been reading this forum for quite a while and got some good advise from just reading other people's questions. One thing I've learned without having to post, is that this place is littered with people that BS their way into trouble, then write sob stories about how unfortunate they are when it backfires and they land themselvs in a mess.

    Not saying you're destined for trouble, but most of these stories do begin with a similar "they wouldn't give me money for X so I just said X".
  • gingeralangingeralan Forumite
    224 Posts
    Eighth Anniversary 100 Posts Combo Breaker
    ✭✭
    Hi all, just looking for a bit of advice/opinions on a loan quote I was offered.
    My situation is that I asked my own bank (Santander) for a loan of £10000. This money is for a deposit for a flat as I am looking to move, I said on the application that this was for a new car. However the APR was 16.7% meaning over 5 years I would pay back around £14440 (can't remember actual amount, I do not have the document in front of me right now). There is no way I am accepting that loan. If the total repayable was £12500 maximum I would have accepted it but anymore than that - no way!
    I can afford the repayments but like I said I refuse to pay back nearly 50% of what I am borrowing. My credit history is good so I am wondering if people think I would be likely to get a better rate elsewhere?
    I earn £30,000 p.a and can afford the repayments. My current mortgage is with HSBC and I would be able to move to a different mortgage with them but not also get a loan for a deposit.

    I appreciate I am very likely to get many replies right now saying "do not take out a loan just save up..." and I thank you for your concern but this is something I have considered very carefully and is not the question that I am asking. I will not take out a loan unless I am happy with it, does anyone have experience of better/good lenders that they can recommend to someone in my situation? If you need further info just ask.

    Thanks for your help.
    Steve

    This is fraud! You lied on your loan application, and presumably are going to have to lie in your mortgage application. If this gets discovered your mortgage provider would be well within their rights to demand full repayment of the mortgage. Do not do this it is illegal!
  • Lenders regularly ask for proof of deposit source. They also look at recent loan searches as a clue as to the potential for deposit to be borrowed.

    No one should buy a home without 6 months payments set aside anyway. People always think thier job is safe, no job is safe.
  • gingeralan wrote: »
    Do not do this it is illegal!


    Loads of people have used loans as deposits down the decades. Illegal - everyone breaks the speed limit every day - I'd say that's a worse offence with more harm potential.
  • Conrad wrote: »
    Loads of people have used loans as deposits down the decades. Illegal - everyone breaks the speed limit every day - I'd say that's a worse offence with more harm potential.

    Loads of people have killed other people down the decades... hardly makes it defensible.

    I would have expected better from a mortgage advisor than supporting mortgage fraud.
    Thinking critically since 1996....
  • Thanks for all the replies. I did not think of this as fraud (never occurred to me), I am not going to take the loan as I said and also from the replies it seems as though it's not advisable other grounds too. So I'll not bother trying anywhere else. Thanks for the info much appreciated.
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