Home owner loan, no credit history

Evamcklusky

Help! My father in law owns his house after clearing the mortgage but can’t get a personal loan because he’s never used credit cards etc so score is bad. He’s applied for two loans for £10,000 but both rejected. He doesn’t want to do equity release if possible as doesn’t want to affect his sons inheritance. Can anyone help with what his options are? Many thanks!

DCFC79

Evamcklusky wrote: »

Help! My father in law owns his house after clearing the mortgage but can’t get a personal loan because he’s never used credit cards etc so score is bad. He’s applied for two loans for £10,000 but both rejected. He doesn’t want to do equity release if possible as doesn’t want to affect his sons inheritance. Can anyone help with what his options are? Many thanks!

No 1 except your fil can see the score so don't dwell on that aspect too much.

What do his credit files show ?


For a start hes paid his mortgage on time, hes had direct debits for various things so has some history.


Has he tried his own bank ?

Gaz83

Does he have an income?

forgotmyname

The £10,000 loan will be deducted from the estate so wont that affect the inheritance?

p00hsticks

Evamcklusky wrote: »

He doesn’t want to do equity release if possible as doesn’t want to affect his sons inheritance. Can anyone help with what his options are?

Can the son take out the loan on behalf of his father ?

Nebulous2

As well as the credit history, affordability may be an issue. Is he working / retired and does he have the income to service a £10k loan?

Did he try an eligibility checker before applying? He probably needs to ignore the .market leading rates, I think his chances of a 3% loan are very small.

With limited history his own bank may be the best bet.

foxy-stoat

His options are the same as any one else wanting £10,000 and have been declined twice for a loan;

Accept that its not going to happen at the moment, save up, sell stuff, apply for a credit card and build up some credit history and apply again in 6 months time.

PRAISETHESUN

Evamcklusky wrote: »

Help! My father in law owns his house after clearing the mortgage but can’t get a personal loan because he’s never used credit cards etc so score is bad. He’s applied for two loans for £10,000 but both rejected. He doesn’t want to do equity release if possible as doesn’t want to affect his sons inheritance. Can anyone help with what his options are? Many thanks!

With two rejected loan applications on his credit file, it is unlikely he will be successful on the third try any time soon. I'd suggest waiting 6-12 months and try again - use an eligibility checker to make sure he has a decent chance of being accepted before applying. He has obviously held credit in the past since you mention a mortgage, so he will have some credit history.

I'd suggest that in a few months time he apply for a sub-prime credit card (the limit he gets doesn't matter), make a few of the usual purchases on it and pay it off in FULL every month (the APR doesn't matter since interest isn't charged if paid off in full), and once he has a few months of history of repayments under his belt the chances of being accepted for a loan should improve dramatically. There many be other factors affecting his loan applications (affordability, income, etc) so it might help to look at those too. Ignore any reference to the score however - lenders only judge you based on the contents of your credit file, not the score; the score is not seen by them and has no bearing on the application's success.

The inheritance issue is a bit of a moot point in my opinion - either he will have an outstanding £10k loan that the estate will have to pay, or the house will be worth £10k less. Either way it is the same net financial situation in my eye, so it might also be worth looking into.

foxy-stoat

PRAISETHESUN wrote: »

The inheritance issue is a bit of a moot point in my opinion - either he will have an outstanding £10k loan that the estate will have to pay, or the house will be worth £10k less. Either way it is the same net financial situation in my eye, so it might also be worth looking into.

Assuming he doesnt make any repayments from taking out the loan to when he passes away.

badmemory

foxy-stoat wrote: »

Assuming he doesnt make any repayments from taking out the loan to when he passes away.

Exactly - there is no reason why an equity release loan cannot be paid off over time. But of course that will only happen if he has the funds to do so. How about a loan from child to father putting a charge on the house? Make sure the charge goes on the house or he/local authority may sell & leave the child in the mire.

AstroTurtle

What's is useable income?
What length of time does it want the loan?
Whats the proposed monthly repayment he is asking?

It could be he has a useable income of £1000 per month, and wants £10,000 over 2 years and the monthly repayment is too high to his income ratio so declined on affordability basis.

Also what lenders is he trying with?