Cooperative bank loan accepted..?

tippingpoint_2

Hi All

Not sure whether anyone will be able to shed any light on this, but it's worth asking...

After struggling with the classic payday loan trap (and subsequent debt cycle) for years, I managed to clear all my high interest debt off and earlier this year celebrated being completely debt free for the first time in 20yrs.

I have been up to date on all payments/accounts for around 12 months and have no CCJs/defaults, but my credit file looks messy as I have had 6 address changes in the past 4 years (which haven't been updated accurately on my Experian) and my electoral roll history is patchy at best. I have been at my current address for 7 months and in my current (ful time/permanent) job for 7 months, but my history differs between my Experian/Equifax/Call Credit profiles.

I will be buying the house I live in from a family member in the next couple of years, but there are some immediately necessary home improvements to be made which will cost around £7,000. We have agreed that if I pay for these now, they will reimburse me once I purchase the house.

I have an income of £2,200 net per month with total outgoings of £1,500, so plan to take out a £7,500 loan over 5 years (which should fit comfortably into my budget). I made an application via Nationwide on Monday (as I understodd they perform a 'soft' check), but was initially quoted 24% APR then ultimately declined once a credit check was undertaken.

I called my current account provider (Co-Operative, who I have banked with for >1yr) yesterday and enquired as to likelyhood of being accepted by them, they offered to run through an application. After running through all the details and running a very quick (10 second) credit check, they told me I had been accepted for a £7,500 loan over 5 years at 5.7% APR.

Although I am comfortable with the repayment amount fitting into my budget, I was surprised that I was (a) accepted and (b) offered the advertised 5.7% APR. I called back to check/confirm the status of my application, the advisor told me that it had been 'accepted' and they were just waiting to send the agreement forms out to me.

This may sound like a very daft question, but does this mean that I am going to receive the loan? I only ask because after years of fighting against huge interest rates and charges, and hampered by my credit file, I can hardly believe that a mainstream bank is happy to offer me a loan at a reasonable rate. I am expecting to receive a letter informing me that they have reviewed my details and are unable to offer the loan - is this just paranoia?

Hope that all makes sense. I was told to expect the paperwork in 5-10 days but the suspense is killing me...

jonesMUFCforever

Be realistic - if your credit files are as messy as you say you will struggle to get any loan let alone £7.5k and at nowhere near 5.7%.

Sorry to burst your bubble.
I would be amazed if the loan with Co-op materialises at that rate.

I hope I am wrong - good luck.
Final point I would be making is - the property is not yours - the landlord should be paying for this.
What happens if you don't buy the property etc?

tippingpoint_2

Thanks for the reply.

My gut reaction is the same as yours - I am fully expecting to be declined. My patchy credit file is due to address inconsistencies on my Experian rather than missed payments, so I wondered whether the Cooperative assess risk on current account holders differently to simply relying on credit files. The language they used specifically 'accepted' was what have me hope, but I appreciate this can sometimes be ambiguous...

The property belongs to my parents. They don't have the money to pay for the renovations, but will be able to reimburse once it has been sold.

Thrugelmir

Dont waste your money by spending it on a property you may never buy.

Now you've done the hard bit. Focus on saving. Make sure that you are registered on the electoral roll every year. Time will slowly heal your credit record. Enabling you one day to apply for a mortgage.

National_Debtline

Some really good points have been made here. I would just like to add that Co-Op have the luxury of being able to look at your bank account history. This is by far a much better tool than a credit check as the information they can glean from it is far more tangible. Although I cannot tell you what the likely outcome might be please bear in mind that they might be right in what they have told you.

Best wishes,

David @ NDL.

tippingpoint_2

Thanks David - I wondered if that might have been the difference between my current account bank & other potential lenders.

When I called back last night to check, they assured me that it had been accepted & it was simply a case of me signing & returning the agreement when it arrives. My gut feel is to believe it when I see it, but I'll admit I did let myself get carried away by thinking I had turned something of a corner.

Thrugelmir - I certainly take your points. This house is a family owned one I lived at for 10yrs previously. I moved back to my hometown this year & into the property, and will be here for a number of years. My parents inherited the house last year, and the money from it will act as their retirement fund once it is eventually sold. The decision to keep the house is a combination of practical and sentimental reasons, but suffice to say I will be purchasing it when I am eventually in a position to do so. In the meantime, my outgoings have drastically reduced whilst my income has gradually increased, hence being comfortable with the responsibility of a loan. My other half lives with me & also contributes to bills, but I have not relied on this in my personal calculations.

Thanks for all the comments thus far, much appreciated

tippingpoint_2

As an update to the above...

I received & returned the paperwork confirming my rate of 5.7%, and the funds arrived in my account today. I can only assume that the point David made about the bank having insight to my account and financial activity must have been the difference.

I also found out yesterday that I will be getting a pay rise. This Xmas day feels like a lifetime away from those ruined by worry over payday loans & job security...

moshoodo1

@tippingpoint,

Congrats on your pay rise and please use the loan wisely.

What a nice Xmas

27col

Actually, you cannot be sure that they will sell you the house after you have spent a lot of money doing it up. You cannot force them to do so. what if they got a much better offer elsewhere. I think that some sort of cast iron guarantee should be in place before the money is spent.
Congratulations on your change of circumstances. I hope your good luck continues into the future.

Apples2

How will your parents reimburse you?

You will be expecting a knock down price as it is from your parents. You parents will want the most they can get.
You'll be expecting not just a cheap house but an extra £7k knocked off the already cheap house.

Mixing money with family seldom works, hopefully you won't find this out later, if they decide to sell at all, ever.

planteria

tippingpoint wrote: »

...My patchy credit file is due to address inconsistencies on my Experian rather than missed payments,...

i would get on to Experian and get it corrected.