Last min Loan advice

yakimov85

Hi,
Last month I opened a 0% credit card of which I've used 30% of credit limit. Unfortunately this was not enough to cover my expense and I'll need to get a loan for an extra £10k (which I'll likely repay within the 1st year). Whilst I've got some savings, I'd need to use up everything I have (inc remaining credit card allowance+loan) in early April for a one off purchase. I do have one other credit card Halifax Clarity which is fully paid off and I use it only for spending abroad (holidays). I've not had any other credit checks since Jan when I applied for the 0% purchases credit card.

So, any advice about for applying for a loan would be appreciated. I'm currently looking at Sainsbury's 2.9% (with Nectar).

Thanks

Ebe_Scrooge

Be aware that when applying for a loan you're not guaranteed to get the headline rate - all you can do is apply and see what you're offered.


Why do you need £10K ? If it's to cover "expenses" then this is worrying - if you can't live off your income then you need to take a good look at your outgoings. If it's to cover this "one-off purchase", ask yourself if this purchase is a "need" or a "want" - it's rarely a good idea to get into debt over a purchase that's not essential.


If you have savings available, use them. Then rebuild your savings pot by paying back into it the same amount each month you would otherwise have to pay off to a loan. Net result is that you'll end up with even more in your savings as the amount you'd have to pay back to a loan will include interest.

yakimov85

Thanks, I'm assuming it's not recommended to apply for another loan (ie TSB @2.9%) immediately after I do so for Sainsubry if I don't get the 2.9%? Once a rate is calculated for Siansbury, is that like a quote that I can come back to a couple of hours later to complete the application (whilst I check other providers) or would I have to complete it there and then before the session expires?

The expense is to pay stamp duty and choices (ie flooring, tiles, etc) on my first new property. I was expecting to have sufficient savings in place prior to the move, but couldn't save up enough in time. I'll need to use all my savings, credit card limit and loan to pay for it in full. My disposable income is not an issue as I can repay this over the next 12 months since my mortgage is less than my rent.

Money_Rollercoaster

Can you not get your mortgage offer amended to include the stamp duty and then make overpayments, to effectively wipe that extra borrowing out over a 12 month period as you suggest? On our mortage we can overpay 10% of the outstanding balance each year without penalty.


You'd need to apply fully through Sainsbury to know whether you've been accepted and at what rate. If you don't get the headline rate, you'll have to wait a few days for the paperwork to come through.

yakimov85

Money_Rollercoaster wrote: »

Can you not get your mortgage offer amended to include the stamp duty and then make overpayments, to effectively wipe that extra borrowing out over a 12 month period as you suggest?

Unfortunately not, as it's not as simple with the HTB Equity Loan.

copperclock

Have you considered the impact a loan application and maxing out a credit card will have on your mortgage application? It might not be a good idea to apply for or use big chunks of credit in the few months/weeks before getting a mortgage.

yakimov85

Thanks, mortgage has already been arranged and is pending the exchange when the property is ready in April (when the stamp duty will need to be paid). The loan has no impact on the mortgage or it's rates.

[Deleted User]

yakimov85 wrote: »

Thanks, mortgage has already been arranged and is pending the exchange when the property is ready in April (when the stamp duty will need to be paid). The loan has no impact on the mortgage or it's rates.

Are you aware that they may run further checks up until completion?

Pixie5740

yakimov85 wrote: »

Thanks, mortgage has already been arranged and is pending the exchange when the property is ready in April (when the stamp duty will need to be paid). The loan has no impact on the mortgage or it's rates.

It might. It is not recommended to apply for credit whilst applying for a loan. It has been known for mortgage lenders to credit check you again before releasing the funds just before completion.

Is there any way you could borrow the money from friends or family instead?

Pixie5740

Money_Rollercoaster wrote: »

Can you not get your mortgage offer amended to include the stamp duty and then make overpayments, to effectively wipe that extra borrowing out over a 12 month period as you suggest? On our mortage we can overpay 10% of the outstanding balance each year without penalty.

You can't add SDLT to your mortgage. You can reduce your deposit to free up some money to cover the SDLT but that will result in a higher LTV which could mean the lender rejects your application based on affordability.

As the OP is using HTB (s)he will need to put in a minimum of a 5% deposit.

Pixie5740

yakimov85 wrote: »

Thanks, I'm assuming it's not recommended to apply for another loan (ie TSB @2.9%) immediately after I do so for Sainsubry if I don't get the 2.9%? Once a rate is calculated for Siansbury, is that like a quote that I can come back to a couple of hours later to complete the application (whilst I check other providers) or would I have to complete it there and then before the session expires?

Making successive loan applications will make you look desperate to lenders. If it's not recommended to make one loan application before the mortgage lender releases funds then it is really not recommended to make two loan applications.

If you are determined to apply for a personal loan to cover these expenses and are adamant that you can pay the loan off within a year don't get too hung up on the interest rate.

For example, if you had a £15k loan with an APR of 2.9% and were able to repay it within a year then you'd pay around £240 in interest. If the loan had an APR of 6% and was repaid within a year then you'd be looking at around £500 in interest.