Personal loan impacting home loan interest rate

am.jovial

I have one curious question involving personal loan, credit score, and home loan.

If I have enough bank balance and I take a personal loan for about 1/4th of my bank balance, would this affect my credit score negatively? Would this increase my home loan interest rate?

The personal loan interest rate offer is very low of about 3.9% and I want to utilise this opportunity. Borrowed funds will be partially spent for some expenses but most of it will be suitably invested for a return of 6%.

I do not want to use my existing savings as I want to keep this as a deposit money for housing loan and also a safety net. My main concern is if this personal brings my credit rating down and pushes up the housing loan interest rate, the advantage of personal loan is offset.

What if I pre-close the personal loan just before applying for housing loan?

Please could anyone advise me urgently.

Many thanks,
Am

thebritishbloke

Having a personal loan will affect your mortgage rates. They'll take it into account when calculating affordability.

Nebulous2

A personal loan may also reduce the amount you can borrow on a mortgage. This will particularly matter if you are pushing close to your borrowing limit.

am.jovial

Nebulous2 wrote: »

A personal loan may also reduce the amount you can borrow on a mortgage. This will particularly matter if you are pushing close to your borrowing limit.

What if I pre-close the loan just before I am applying for home loan?
May be an example would help here. Supposing I have £20,000 in my current account and I borrow £5000 for 4% and use or invest it wisely. If I have to apply for the home loan in another 4-5 months, how about pre-closing this personal loan just before applying for the home loan? I understand the credit rating to be negatively impacted if I have no money in my current account. But, why should it affect if I have and I borrow a fraction of what I have !!

am.jovial

Where can I find the best deal for loan for a used car buying?
I have seen the attractive personal loan offers from Tesco, and Sainsbury's etc.

Please suggest.

CLAPTON

am.jovial wrote: »

What if I pre-close the loan just before I am applying for home loan?
May be an example would help here. Supposing I have £20,000 in my current account and I borrow £5000 for 4% and use or invest it wisely. If I have to apply for the home loan in another 4-5 months, how about pre-closing this personal loan just before applying for the home loan? I understand the credit rating to be negatively impacted if I have no money in my current account. But, why should it affect if I have and I borrow a fraction of what I have !!

so you invest and get 6% pa which cost 4% so profit is 2% per annum

so the profit on 5,000 will be 5000 x 2% x 4 /12 = £33 over 4 months

why ever risk the mortgage amount of rate for £33

makes no sense