Information and Advice please

angelsabove

Am in the process of getting a secured loan for home improvements, have managed to get a great deal. My partner works but I am severely disabled. Have just been told that I need to write a letter stating what I will do when my child benefit and tax credits end in ten years as the loan is over 15 years, and I need to justify where I would get the extra income from. My husband could cover it with overtime but it isn't guaranteed, and I am also due an inheritance within that time but am unable to get confirmation of this. What would be the correct thing to put down? I'm totally confident that this loan would be paid with no problems at all. We have a lot of equity in our property. Any advice would be much appreciated, thanks.

claret_mike

How would we know how you could afford a loan in over 10 years time?

Could you not take the loan for 10 years?

Have you considered what would happen if partner loses their job - do they have sick pay also?

By sounds of it the lenders are wanting to ensure that you have the means to pay.

If you cannot afford full loan over 10 years, can you do it for less?

arbroath_lass

Are there no grants available for any of the work so you could reduce the term?

I have to say I wouldn't take a loan if I had to rely on CB and Tax Credits in order to pay it.

angelsabove

Thanks for replying. I'm not relying on benefits to repay the loan. My husband works and his wages more than cover the repayments, but because I'm named on the mortgage, I have to be on the loan application, and so have to justify what I will do when the benefits end, and am unsure how best to answer their question.

Tixy

How about "when the child benefit ends my outgoings will decrease as I will no longer be supporting my children, they will be adults and have to support themselves?"

manzanilla

More than 10 years is a loooong time for a loan. Do you mind saying who the lender is? And what is the rate? I have seen people get into a mess by taking out a variable rate secured loan and then seeing the lender hike the interest rate, even when market rates aren't moving:(

Have you done the arithmetic on what the total cost of the loan would be? It would save you a LOT of money if you could repay it over 10 years rather than 15.

Clive_Woody

manzanilla wrote: »

....variable rate secured loan......

That's the thing to watch out for. Is the loan a fixed rate or is it a variable rate?

arbroath_lass

angelsabove wrote: »

Thanks for replying. I'm not relying on benefits to repay the loan. My husband works and his wages more than cover the repayments, but because I'm named on the mortgage, I have to be on the loan application, and so have to justify what I will do when the benefits end, and am unsure how best to answer their question.

They seem to have decided the loan is not affordable without the benefits, though. It's not just the repayments it is all your outgoings. Does your husband's wage cover all that? Could you manage now without the benefits?

Tixy's answer is a good one, though