Refused/high rates

naomi199022

I've just got a mortgage on my council house and my repayments are now less than my rent at 205 per month. I wanted to take out a loan to do some home improvements. I work for the NHS and earn around 26k per year and my credit file is good. No late payments, defaults, judgements ect. Its squeaky clean, or it was until I applied for a loan and got terrible rates at 14% so applied for a few more trying to get better rates. The best I got was 13.9%. I dont understand what is going on! I got a loan for a car about 3 years ago for £6.5K at 3.2%, I even paid it off 6 months early as I was in a position to. The only debt I have right now is £500 on a 0% interest credit card, that's it. So I dont understand why I'm getting such rubbish rates when trying to get a 10k loan, and have been refused off some companies when I've tried to get a better rate off them. I can easily afford the repayments, I am already in good equity with my house, I dont have large outstanding debts, I own my car out right ect. I dont know what to do now, how bad are these refusals going to effect my credit report and how long for? I'm not going to accept the 14% loan as I'm not comfortable with paying that much interest, i think it's ridiculous. Any advise or knowledge of why this is happening to me would be great. Thanks. 

TadleyBaggie

A £10K loan on top of the mortgage, with that salary, is pushing the envelope for lenders and probably the cause of the high rates. Sounds like you may also have a "thin" credit file which lenders also don't like.

normanna

Applying for loans in quick succession won't help either as you can look desperate.

naomi199022

I dont think a 10k loan on top of a 40k mortgage is bad at all. Even if I went for the 14% loan my mortgage plus loan repayments is less than £500 and that's what most people pay on a mortgage these days. I dont understand how I've gone from having a 3.2% loan 3 years ago, to getting a 1.69% mortgage, to now with loan rates of 14%. If I did get the 14% loan, in the future say a year or 2 could I get another loan with a cheaper rate and use the new loan to pay off the rubbish rate one, thus slashing the interest I pay? Is that worth doing/possible? 

[Deleted User]

The more debt you accrue, the higher your rates are likely to get.

Slow down, pay down your mortgage, let your credit file settle down and then try again in a few months 

DCFC79

Are you not able to save up and in say 6 months to a year apply again but a smaller amount ?

MEM62

naomi199022 said:

I dont think a 10k loan on top of a 40k mortgage is bad at all.  

Maybe you don't but lenders are obviously taking a different view.  Lending is tight at the moment for obvious reasons.  The advice offered by zx81 is sound and you would be wise to take it.