Time to wait to apply for loan after mortgage completion...

jenannew

Hi - just looking for a bit of advice. Last week I completed on a house purchase and now I'd like to take out a personal loan to be able to to do some improvements on the house before moving in. But my concern is that if I apply for a loan shortly after completing on a mortgage then I might be rejected?

For info: I applied for the mortgage last September, but the purchase took until last week to complete (not sure if that affects the details on my credit file).

Since applying for my mortgage I've gotten a new job and had a significant pay increase so I'm hoping that this should stand me in good stead from an affordability perspective, but not sure?

My mortgage is for £187k and I'm trying to take out a £10k loan. I haven't applied for any yet, only a quick check on here for comparison so a soft credit check completed. However I was thinking of going with my own bank for the loan as they offer a payment holiday of 3 months up front.

Happy to provide any more details if it helps.

Many thanks!

thebritishbloke

So long as the mortgage is finalised and you're in the house, you can apply.

Thing is, you probably won't be on the electoral roll for your current address yet, so most reputable lenders will probably turn you down or offer you a stupid interest rate. I'd get on the electoral roll, wait for it to show up on your credit files, and then apply.

Avoid payment holidays if you can, they're a dwindling road to failure. You'll be paying 3 months interest on the full balance (i.e. on £10k at 4.9%, you'll be adding an extra £120+ interest to the balance than you would pay if you start to repay it straight away). Some people also "forget" they have the loan to repay when they take a payment holiday. Just saying if you do decide to do that, please make sure it's the best idea nad you can afford it.

jenannew

Thanks for the speedy response. I've just registered for the electoral roll at the new address although technically not living there yet until we get it a bit more habitable (hence the loan!)

My partner has savings coming available in November so in actual fact we were thinking of using the loan as a bit of a stop gap until he can get access to his savings and then paying it off in full. The loan I want to go for just has a one month penalty for doing this so the payment holiday we were just thinking means we pay even less towards it until his savings are available. Although appreciate the interest is still added on.

Would it just be getting on the electoral roll that will make the difference then? There's no concerns about too much credit appearing in quick succession on my file? I just don't want to apply too soon, get rejected and then have to wait even longer!

Alternatively we thought we could use credit cards in the interim but while this is fine for purchases, we will be needing cash to pay for people's labour so that is the only downside with the credit card as far as I can see it.

jenannew

And yes, meant to say, mortgage is finalised. The purchase completed last Friday.

thebritishbloke

So long as you have a decent repayment history with credit cards and other credit, then yeah the electoral roll will just be the main factor hindering you.

jenannew

Brilliant, thanks. I shall be keeping a close eye on the postbox and confirmation from my local council then! Many thanks

Tixy

jenannew wrote: »

Brilliant, thanks. I shall be keeping a close eye on the postbox and confirmation from my local council then! Many thanks

There is usually a delay between the council confirming that you are now on the electoral roll and this information being updated with the credit reference agencies (up to a month).
For it to make a difference to a potential lender wait until your credit files show you as being on the electoral roll.

Paully232000

jenannew wrote: »

Brilliant, thanks. I shall be keeping a close eye on the postbox and confirmation from my local council then! Many thanks

It was about 2 or 3 months between my registering and being on the council list the year before last as far as i can remember. Don't wait for the letter, phone them up and ask.