advice needed re refused loan

camper_1982

I cant get a loan.

Heres my situation.

Got a mortgage two years ago - the balance is now £83600 - also took out a secured loan on the property (£25k) as it was in need of major renovation. This has been done and the house is now worth £135k.

I have a credit card which has a balance of £1800 and a limit of 2300.I dont have any other debt. However my partner was useless with money and we had to take action to clear some of the debt. They never missed a payment but had a little too much spread everywhere. They have a personal loan for 15k with A and L and a two credit cards (one zero balance) and the other has 2.5K left on it.

I went to get a loan for 4000 for myself and was refused with sainsburys so i applied to a broker to see if they could help. They refered my details to black horse finance who ive never heard of and they told me they were part of lloyds. So they got me to go in to there branch to get a loan. They then refused me and told me the secured loan was the problem as its like a second mortgage and its making our credit scores very low.
I earn a fair wage and can easily afford to pay a 4000 loan. Is it this homeowner loan affecting me or is it my partners debt.

I have friends who pay a mortage of £900 a month, live in a massive house, pay it interest only and are on less money than us and they just got loan for a car.

Any advice? Our mortgage is due for renewal may 2008.

keyser123

It's difficult to say without knowing your exact income and credit history. Provided the secured loan is upto date with no missed payments it shouldn't cause you a problem applying for unsecured finance, but it may affect your income affordability in the lenders eye's.

I wouldn't recommend redeeming your secured loan to raise the finance as if your loan was taken out for £25,000 it's regulated by the consumer credit act which means the redemption penalties should be the balance outstanding plus one month's interest. If you consolidate your exisitng secured loan and raise the additional 4k on top, the loan would probably become non-regulated (depending how much is outstanding) and therefore be subject to harsh redemption penalties if you redeem within say 3 or 4 years (if you plan to re-mortgage in 2008 you'd have say 6 months interest as a redemption penalty).

If you applied to Black horse for an unsecured loan your partner's credit history shouldn't restrict you so I would say it all comes down to income affordability - as far as the lender goes, you don't have enough income to qualify for a loan.

Don't look to consolidate the exisiting secured loan until you re-mortgage.

Order a copy of your credit search from Experian or Equifax and see if there's anything on there that may have resulted in you being declined. If not, probably comes down to affordability

keyser123

It's also worth bearing in mind that broker's are unable to refer clients' to the majority of high street lenders for unsecured finance. In theory they could, but they'd have to tell you to apply for yourself and therefore receive no commission.

Most broker's have access to either Black Horse or Welcome finance so what they recommend may be more in their interest than yours.