Help needed for loan application

rms1

Firstly can I say that I wasn't sure where to post this so I have put it on 2 forums so forgive me if you see this twice.

My mortgage term with the Halifax is coming to an end in October. We at first thought about moving but decided to stay put.

I have just been accepted for a new mortgage for 150k with another society, this is now going through and the transfer should take place within 10 days.

The plan now was for me and my wife to now borrow 20K for some home improvements.

I know that we have a good credit rating (never any judgments etc) and never been refused credit or credit cards. We do have some credit cards with small balances that we usually clear on a monthly basis. I don't owe any more money and have no other loans.

I have a Santander 123 account so I just applied for a Santander personal loan on the telephone. Before the application was put through, I was quoted a rate of 3.54% over 60 months. My disposable income was more than enough to cover the loan.

I then went through the long application which came back accepted but on a much higher rate of 9.6% which is of course unacceptable.

The only reason I can think of for this happening is that I still have the 157k outstanding with the Halifax although this will be cleared within the next few weeks and my recent application for the new mortgage will be on file.

The problem I have now is that the application for the 20k today will be on my file. I am guessing that this might compromise any further applications. I don’t know what to do; I feel that making further applications will just make matters worse.

Any advice would be appreciated.

foxy-stoat

Wait until your mortgage has completed then decide wether or not to take the loan at the rate you have been offered or to look for a better rate.

Pay no attention to the advertised low rate as not all people actually get offered it.

rms1

foxy-stoat wrote: »

Wait until your mortgage has completed then decide wether or not to take the loan at the rate you have been offered or to look for a better rate.

Pay no attention to the advertised low rate as not all people actually get offered it.

What I thought about was to accept the loan and get the work done so it is one headache out of the way. Then, I can search around for a better rate when the mortgage is completed and the dust has settled. Santander said it would be a matter of paying 2 months interest for settling early. this would equate to £172.

Gaz83

rms1 wrote: »

What I thought about was to accept the loan and get the work done so it is one headache out of the way. Then, I can search around for a better rate when the mortgage is completed and the dust has settled. Santander said it would be a matter of paying 2 months interest for settling early. this would equate to £172.

What happens if you take the loan and then the mortgage is declined due to a material change in your financial circumstances?

Smodlet

Hi, would a 0% credit card for some of the £20k (or all of it?) be a possibility? Then you might be able to apply for a smaller loan at the less favourable rate. I would think it best to wait until your re-mortgage application has gone through, first, though. I am sure you already know there are eligibility calculators on here which leave only a soft search so do not affect your credit file. HTH.

rms1

Gaz83 wrote: »

What happens if you take the loan and then the mortgage is declined due to a material change in your financial circumstances?

We already had the offer.

DCFC79

Why was the loan offer of 9.6% not acceptable to you ? It's a good rate, maybe you had thoughts it would be lower. Your credit rating won't be seen by lenders nor banks so it won't have any bearing on the loan rate.

Gaz83

rms1 wrote: »

We already had the offer.

Lenders do last-minute checks prior to actually completing the mortgage and releasing the funds, to make sure there have been no changes to a person's financial circumstances that could affect on affordability.

Have a read on the mortgage board and you'll find countless posts from people who had a mortgage offer, took out a loan before completion, and then found the offer was rescinded.

[Deleted User]

rms1 wrote: »

We already had the offer.

But you haven't yet completed the remortgage. The offer can still be withdrawn subject to final checks.

rms1

DCFC79 wrote: »

Why was the loan offer of 9.6% not acceptable to you ? It's a good rate, maybe you had thoughts it would be lower. Your credit rating won't be seen by lenders nor banks so it won't have any bearing on the loan rate.

It's 3 times the advertised rate.

rms1

Gaz83 wrote: »

Lenders do last-minute checks prior to actually completing the mortgage and releasing the funds, to make sure there have been no changes to a person's financial circumstances that could affect on affordability.

Have a read on the mortgage board and you'll find countless posts from people who had a mortgage offer, took out a loan before completion, and then found the offer was rescinded.

Thanks for the heads up, in that case, I think I should decline the offer.