Urgent Advice needed in cancelling the topup loan

sudhasasii

Hi All,

I have taken a topup loan of 20k adding to the loan which I have taken a year ago. the previous loan is with interset rates 3.9% and the topuploan is with 6.9%

What the bank did was they closed the old loan(3.9%) with the topup loan and lended me the remaining money.

I have 14 days to cancel the topup loan and I want to cancel the loan. My question is

Will I get reopen the old loan with lower rate when I cancel the topup loan?

Thanks
Sasi

pvt

The obvious answer is to ask the bank.

What amount was written on the loan application for the new top-up loan? - if it was just the extra amount then I would argue they have pulled a sharp one, however if it shows the total value of both the old and top-up loan then you may have difficulty arguing they have done anything wrong.

SeanG79

My guess would be no. They previous agreement has been settled and closed. They wont simply resurrect the loan. To cancel the new loan, you will need to return the full £20k, plus any interest that has accrued for the days you have had the loan but the bank will be able to confirm this.

Gaz83

To cancel the loan you'll need to pay the £20,000 back plus the interest that's been incurred, which would be approximately £3.78 per day at a rate of 6.9%.

They won't reinstate the old loan as it's been settled, I would think. You'd need to apply for a new one.

sudhasasii

Hi Both,

Thanks for your reply.

Here is the incident happened.

The old loan I have taken jan this year. I have taken this new loan for homeimprovement few days ago. As I said, they closed the old loan and provided me the remaing loan .ie. 10k (balance left in old loan)+10k for home improvemnet.

Meanwhile, I had my deposit amount for my new house in the bank which are all my savings. I have asked bank to trasfer my deposit, and they thought that I took the loan transferring it. But that is not the case, I have 30k of savings, + 10k of loan before the new loan.

When the new loan(additional 10) is sanctioned, the closed the old loan my account left with same 30k savings + 20k of new loan.

I went to bank to transfer the 30k to my solicitor, but the bank replied me saying that you took 20k as a loan and transfering 30k to solictior and they asked me return back the 20k saying it is a breach.

Then I explained to bank, saying only i took 10k as additonal loan , rest of them are my savings. Bank understand the situation and they asked me to payback the partial topup loan of 10k.

The problem is now I left with higher interset rate for nothing and I havenot benfitted by the loan. I have taken 10k topup and they have taken back. I left with higher interset rate now for the old loan running.I have to pay extra 3k.

what can I do now?

Can I argue with bank?

Thank you

SeanG79

When you received the new loan, you should have had £40k cash (£10k from the new £20k loan after original loan was settled) and a £20k loan...what happened to the additional £10k?

sudhasasii

After receving the new loan of 20k, I had 40k in the account including my savings.

Eventually, I had 10k added to my account with 30k savings after closing the old loan balance 10 k.

In a nutshell

Before new loan
Account left with 30k cash
Loan account with 10k balance

Then asked bank for 10 k more loan for home improve, they provided 20k out of which 10k is to close the exisitng loan and credited the remaing ing 10k.

Then I asked bank to transfer my 30k cash to solictor and they said, it is breach.

Thanks
Sasi

SeanG79

Ok, which terms do they state you have breached?

sudhasasii

they said, i took 20k loan and transferring 30k for newhome deposit .
so, 40k left in account -20k loan = 20k is money belongs thats what they said.am trying to transfer 30k.personal loans are not used for mortagage deposit and it is breach.

I said, no it is 30k and bank closed the exisitng loan.then they understand and taken back the 10k topuploan.

now I have not benfitted and bank cant revert to old interset rates..

Thanks
Sasi

SeanG79

Ok, so really you should have waited until the mortgage had gone through and then only applied for the loan extension.

Can you not provide them with documentation showing the settlement of the other loan facility that will coincide with the new loan starting and your bank statements showing you still have the remaining £10k?

Foxy-Stoat_3

So at best you have lost the 3.9% interest deal and upped it to 6.9% interest if you don't cancel the new loan. How much is this actually going to cost you over the length of the loan?

I suspect this will cost you more if you cancel the new loan as you will have to take £10,000 out of your savings. On the plus side you won't be £10,000 in debt, you could transfer the monthly payments into a cash ISA earning interest rather than paying it.

Money saving at its best there, well done !

Shame you didn't take out the new loan after you bought your new house as this may well hinder the sale now.

Good lucks