HSBC Homeowner Loan.

wiley25

Hi all.

Bit of background:

About 3 years ago I had about £6000 of credit card/overdraft/other finance debt after I renovated/furnished my property, which I own (with a HSBC residential mortgage, value £85,000, currently owe 58,000).

I applied at the time for a homeowner loan of £10,000, 6k to go towards debt consolidation and 4k towards home improvements. As I didnt itemize the home improvements part of the loan they declined the loan (and adviced not to reapply for a homeowner loan again for a year or two) and I ended up getting a personal loan to consolidate the debt.

As it stands now I have about 4000 left to pay on the personal loan and am looking to purchase a new (used) vehicle.

What recently experience do people have with HSBC homeowner loans, what is their lending criteria? ie, will they lend for the purpose of a new a vehicle or do loans have to benefit them (ie, home improvements)?

The plan would be to spend 4k of a £10000 homeowner loan on continued debt consolidation (from my previous consolidating personal loan) and the remainder on getting a much needed new vehicle.

Thanks in advance.

BrassicWoman

if, in 3 years, you have repaid only 2k and have no extra savings, how can you afford a £10k loan?

wiley25

BrassicWoman wrote: »

if, in 3 years, you have repaid only 2k and have no extra savings, how can you afford a £10k loan?

The original loan was bumped up to nearly 9,000 once the interest was applied.

Monthly repayment currently of £168.

A secured loan of £10,000, matching my remaining mortgage term (20 years) would be £44 pm. Much cheaper (in the short time, admittedly) than other options of financing a new vehicle.

DCFC79

Sorry to say but the lending criteria is secret, no 1 on here will know andd even if they did you may have to be bumped off.

Maybe ask the bank your question.

wiley25

Hah, it certainly seems that way!

I would ask the bank, but during the last application process I asked that very question, even said I would come back to them with an itemised list of all the improvements I planned and their cost. They told me it was too late then and to try again in a couple of years...

BrassicWoman

how much would the interest be on your £44 a month loan? over the whole life of it.

wiley25

A lot more than just paying off the personal loan and borrowing additional funds for a vehicle. However, it would mean being 3-400 a month better off, and as I'm in the process of a business start up, it is a necessary evil. Relatively small overpayments would also vastly reduce an additional 10k.

I also hasten to add that the subject of this thread isn't "Should I get a loan?", I'm big enough and stupid enough to manage my own affairs, was just after some recent experience dealing with HSBC.

Thank you for your concern though, I understand a lot of people would take the smaller monthly payment and not realise the long term implications.

ViolaLass

£6k for a car? You could easily spend less.

BrassicWoman

Banker's rule of thumb; the loan should be paid off before the asset needs replacing. Holiday loan = 12 months, you go every year. Kitchen/bathroom, 10 years. House extension, life of mortgage.

Car loan - 3, 5 years? Yet your car is going to last for say 20 years going by loan length.

You'd be mad.

StopIt

wiley25 wrote: »

The original loan was bumped up to nearly 9,000 once the interest was applied.

Monthly repayment currently of £168.

A secured loan of £10,000, matching my remaining mortgage term (20 years) would be £44 pm. Much cheaper (in the short time, admittedly) than other options of financing a new vehicle.

Your maths are way off.


20 Years x £44 is only 10560, which on a £10,000 loan would be an almost 0% APR.


What are the exact finances?


Firstly, this is a route that doesn't address why you're facing this situation. Yes, you'll be "better off" month to month, but what happens when that money is used and then some? More, secured borrowing? I mean, you've already consolidated once, and are likely not even past the point of paying off the interest accrued by taking out the loan.


Get to the DFW board ASAP, post up an SOA and stop using debt to "get yourself out" of it. It has only one end.

PeacefulWaters

You want to put your house at risk to buy a car?

Mad.