Unsecured personal loan advice please??

covmike

Hi there,

sorry this may be a big post but I will try and be as succint as possible.

My girlfriend and I are in our mid 20's and currently privately rent. We are currently in the process of buying our first property (FTB) but the property we are moving ahead with needs some work on it. Our mortgage has been approved but we will also need to apply for an unsecured loan to fund some of the works needed to the property. We are unable to do a secured laon as we would not yet have enough equity (90% LTV).

When applying for a loan they ask questions about your circumstances i.e current rent and council tax payemnts etc. Now this info is going to be different once we move into the new property compared to where we are now. the mortgage repayments are less than our rent etc. my question is when applying for the loan should I be giving the figures from my current circumstances or from the circumstances if the move takes place? I am worried as I am aware that lying on these applications is fraud but i'm not sure if this is lying as such.

I will only be taking the loan if the property sale goes through, so there is no danger of the circumstances being different to how I forsee them as they are all set in stone now (as long as the sale goes through). If the sale does not go through I will not advance with the loan.

Also does anyone have any experience of laon applications shortly after mortgage approval? Is it likely a loan application would be refused purely on the fact we have only recently taken out a mortgage? Or is this seen as a positive aspect?

Sorry for the long post, thanks for your help.

Mike

R_P_W

Do not apply for any loans, credit cards or any other form of credit until you COMPLETE the house purchase.

90% LTV is at the top of what banks will generally lend so being seen to apply for more credit might be a problem (espcially if the loan was declined).

How much are you looking to borrow? Do you have any other credit at the moment?

Tixy

Do not apply for a loan before you have exchanged and completed on your mortgage/house purchase.

There are plenty of cases where people have done so and the mortgage company have then revoked the mortgage offer.

After you have moved in would be the time to consider a loan application (although best to wait until you are on the electoral roll and have been paying the mortgage for 6months or so before you do).

covmike

Hi thanks for the quick reply.

I had the same worry so called the mortgage provider to clarify if me applying for a loan would affect their decision now it has been approved and she said no (as long as the offer is still valid when completion takes place).

Completion is set for around the start of December, but the mortgage have done their credit check and have approved the loan already.

I appreciate the warning and will probably wait until at least exchange of contracts before applying for the loan however the above questions still ring true.

My situation is a little complicated. My rental agreement does not end until mid Feb. We are looking at exchanging early December. We have enough savings currently to cover our fees, searches, 10% deposit, and our remaining commitments on our rental property. So in essence our "monthly bills" will actually be reducing slightly from rental once completion takes place as our remaining rental commitments are covered by remaining savings.

The plan is to do the work on the property while living in rental so we don't have to live through the work.

And yes both my partner and I both already have a personal loan each at the moment. Though as I have attempted to explain the "new" loan repayment is actually going to be absorbed by the difference between our current rental repayments and the mortgage repayments.

Does that help?

Thanks.

Tixy

Mortgage providers always do another credit search just before completion. I really wouldn't risk it, there are some real horror stories of people who have legally exchanged and then the mortgage provider pulls out before completion.
Your mortgage provider may not be correct in what they say, they cannot know what your files will show the date when they do their final searches.

Aside from that - regarding your questions, give the accurate position for your circumstances at the time you apply for the loan, not what might happen afterwards. So you'd need to inform them of your existing debts and commitments, and existing outgoings etc.

covmike

Really good advice guys. Thanks a lot. To be honest that is what I was leaning to anyway I just wanted to hear a few others views on the matter.

Thank you.

R_P_W

I wouldnt risk it myself, if you exchange and pay the 10% deposit and then they pull your mortgage offer you are pretty much stuffed as you will be legally required to complete (not easy without a mortgage) and if you cant the seller will probably sue you.

covmike

I will wait until completion before applying for the loan then.

A second question then following your advice. As explained we will be residing in our rental property while the work takes place so when applying for the loan which address details etc should I give? Rental or Owned?

Surely it will be better to apply using the rental address as we will still be living their and are already on the electoral roll there.

Tixy

Yes, if thats where you are living then that is the address to use for a credit application.

covmike

Thank you all. Much clearer in my head now

meer53

As you both already have loans and will soon have a mortgage and rent to pay too, i'd wait a while before making any more applications.