How to shop around for loans?

pinkteapot

Hello, new board! Not ventured in here before - the hubby and I need (want!) our first personal loan. Unless any lenders offer joint name loans, we'll do it in hubby's name as he earns more than me.

Looking to borrow ~£20k over five years. Been quoted 3.3% by HSBC on their Premier Personal Loans. We've got good salaries and credit scores so should (in theory) be able to borrow from pretty much anyone who offers loans of this size.

I have no idea what the going rates are for loans. Any recommended loan comparison websites? Anyone know if 3.3% is a good rate for that sort of size loan?

We do want one with overpayments allowed and early repayment charges to be as low as possible, as we can throw quite a bit at it each month to clear it quicker. Or I suppose the overpayment thing doesn't really matter - we could save up and then just clear it in one go, again so long as the early repayment charge is reasonable.

On that, any tips on sneaky things to look out for in the T&C for a loan newbie?

lee111s

3.3% is a fantastic rate. The other option is to remortgage and release 20k of equite.

If you have a good LTV it'll possibly be cheaper than 3.3% and would allow overpayments.

pinkteapot

Thanks! It sounded like a low rate to me, but not knowing the loan market and with the base rate so low, I wasn't 100% sure.

Mortgage OPs are why we now need a loan, d'oh. We've been hammering the mortgage down quickly for the last few years, but in doing so didn't think to save up for big purchases. Sadly we don't have a mortgage where you can draw your OPs back if you need to. Lesson learned!

To formally remortgage on our current product (a very cheap tracker), we'd have to pay a high arrangement fee again. I wonder if it's worth a call to HSBC (mortgage provider) to see if we can extend the mortgage by £20k without a full remortgage application. Answer will probably be no but might be worth a try.

Mortgage rate is currently 2.24%. I struggle to get my head round whether we're better doing £20k on a 3.3% loan and clearing it completely in a couple of years, or adding it to the mortgage and OPing, which would mean adding it to a longer term debt. I get confused on which option is cheaper overall in terms of total interest paid!

Pixie5740

Yes lenders offer joint loans and yes 3.3% APR is a very rate if you are offered it. There's a MSE Loan Eligibility Calculator you could try. HSBC offer some of the most competitive rates but they are a picky lender. However, as you are an existing customer HSBC is probably a good shout.

A 3.3% APR loan that you plan to overpay will probably work out cheaper than paying high arrangement fees to mortgage. As long as you overpay there really isn't much between 2.24% and 3.3%.

pinkteapot

Thanks! Confirms what I was thinking.

Just on putting in the loan amount and duration, the cheapest rate MSE has listed is 3.4%, so not *quite* as good, so I didn't bother going so far as to put our personal details in.

We've already done the 'personalised quote' with HSBC (where you put in all your details including monthly budget and address history, but they don't do a credit check so it doesn't affect your score) and were offered the headline representative rate of 3.3%, so we've got as far as we can with them before doing a full application. I don't believe we'll have any problem with them lending to us, but if we do I'll come back to the calculator to find the next cheapest alternative.

We've encountered HSBC's pickiness in the past, with mortgages. Always had HSBC mortgages as they've been cheapest, but on one house purchase they wouldn't lend because my job at the time was a (long-term!) contract rather than permanent. Had to go elsewhere but switched back as soon as I was made permanent. (Stupid waste of fees, grrr). At this point though there's nothing in our circumstances that should cause a problem (touch wood).