Does Mortgage affect personal loan?

findmedeal · 30 January 2016 at 3:32PM

Hi I took out 90% LTV mortgage (withNationwide) in October2015. I am interested in apply for 25K personal loan for 5yr (With Hitachi or Tesco or Zopa) to renovate the house. I am wondering is there anyway to find out what maximum a lender can offer me on personal loan. I do not want that my application is rejected having taken mortgage just a few months back.

Lemonsqueezer78 · 30 January 2016 at 4:27PM

ALL of your regular outgoings - including your mortgage - will be taken in to account when you apply for a loan.

It will vary from lender to lender, but unless the loan is coming from your own Bank, you are likely to be asked to explain the details of your income and outgoings - including all bills, mortgage and other credit commitments - and (for a loan that size) probably provide statements and/or payslips to provide proof of income.

Your own bank may provide you with pre-approved loan offers up to a set amount that they can see you can afford from your current accounts - but beyond that, other lenders who don't know you are unlikely to have any kind of calculator to tell you what they will lend you, unless you go through an application with them.

Similar to mortgages, lenders will require that you demonstrate you can afford the loan repayments, and they will also factor in to their risk scoring what the loan is actually for. Can you afford the £450-500+ a month that this loan is likely to be?

And more importantly, if you do have a spare £500 a month floating around - why not save up for a couple of years to do these renovations? What kind of renovations are these and are they super-urgent?

findmedeal · 31 January 2016 at 9:12PM

Thanks. Yes the repairs are urgent.

Can the personal loan be taken jointly with my wife? Our mortgage is also joint and in last 3 months our annual income has increased (after taking the mortgage) by >10% due to one of being promoted.