Advice needed

shie6523

Hi All,

Both I and my partner had applied for a £20k home improvement loan with Yorkshire Bank at a representative rate of 2.9% over 5 years, total amount payable is £21,491, £358 (which we can easily afford). Our combined gross salary is £67k a year (me £44k, her £23k).

We had a response to our application today. YB will loan us £20k, over 5 years, at a rate of 15.9% though, that's £485 p/m, total amount payable is £29,117, it's fair to say, I'm not continuing with the application.

2 questions:
1. Any reason as to why there is a big jump in the APR we applied for and what we were offered?
2. Is it worth applying one more time for a loan with another provider (also advertising an APR of 2.9%) as we are desperate to get the house done? or is it best to wait for a few months? if so, how long should we wait before we next apply.

Thanks in advance for any responses.

Darren.

Ebe_Scrooge

The representative APR advertised by lenders is offered to 51% of successful applicants - that's the rules laid down by law. There could be any number of reasons why you were offered a higher rate - perhaps they've filled their quota for this month, perhaps you just don't fit their profile of an "ideal" applicant, whatever that may be.

By all means make one more application and see what you're offered - but more than a couple of application in quick succession begins to reflect negatively on your credit history, so it would be worth leaving it 6 months or so before making a third application.

Oh, and it's worth checking your credit files just to make sure there's nothing in there that would make you a less than attractive proposition to a lender - missed/late payments in recent months, check that you're on the Electoral Roll, that kind of thing. You can check all 3 of your files for free, there's no need to sign up for a paid subscription to Experian or anything like that.

Clive_Woody

Before applying again it would be worth checking your credit files (for both of you) to see if there is anything adverse on there that may count against you (Ignore the score, this is a made up number).

Could you consider taking a smaller loan to get some of the work done, pay this off then get a second loan later (or save up)?

Also have a look at the eligibility checker link below to see if a particular lender might be better for you.

https://www.moneysavingexpert.com/eligibility/loans-calculator/

shie6523

Thanks Clive, we'll both check our credit reports later in the week, however we are on the electoral roll and neither of us have missed any payments at all in the time we've been together (8 years)? I know it doesn't count for much but Yorkshire Bank is our mortgage provider and we've never missed a mortgage payment for the last 4.5 years so I thought that might have helped as well - obviously not.
We'll look into the option of borrowing less and also take a look at the eligibility calculator.

Thanks Clive.

shie6523

Thanks Ebe, much appreciated.

DCFC79

Have you no savings to get some of the work started and then reapply in a few months ?

shie6523

Nothing adverse on the credit reports Clive. Loan eligibility calculator shows me as being 80% successful for a £20k loan at 2.9% with Yorkshire Bank?
Also, we are due to remortgage in January 2020. Would taking out a loan now affect us when re-mortgaging?

Thanks,
Darren.

shie6523

Only a small amount of saving, this is mainly for emergencies. We need the house doing hence the loan application.

[Deleted User]

A £20k loan will impact on your affordability.

Whether that makes a difference depends on how tight you are already.

Nebulous2

I keep saying this - lenders need to give 51% of applicants the headline rate. People with very good credit history check the loan rate tables and apply for the best rates, which means they can afford to be very picky.

If you've been rejected at 2.9% move down the table a bit to 3.2, 3.3% or so. You may find that easier to get.

ciderboy2009

How big is your mortgage?

What other debt do you have?

Based on the facts that you've got a very good income, minimal savings and the eligibility calculator is only showing an 80% chance then I would say that your problem is affordability.