Strange Lloyds loan behaviour.....

kpmatthews

Hi, we took a mortgage holiday because of COVID-19. Three months ago when I looked in my Lloyds app I was “highly likely” to be accepted for an unsecured loan for “upto £50k”, but this morning when I looked I was “highly unlikely” to be accepted for anything and warnings were popping up about affecting future borrowing etc. Then this evening When I looked I was “highly likely” to be accepted for borrowing upto £35k. What gives...?!

kpmatthews

With hindsight I wished I’d borrowed three payments worth on an unsecured loan, the interest would have been lower. But would a small loan have affected my future borrowing more than a mortgage holiday? Thanks for reading  

Galloglass

You're welcome 

dunstonh

Banks are allowed to take into account authorised arrears on mortgages when making decisions about future lending.  So, whilst they cannot be registered as defaults on your credit file, that does not stop lenders using that information as they see fit.

In the last couple of financial crisis, you saw lending criteria change almost daily (and at peak, it was daily with some).  

Grumpy_chap

kpmatthews said:

Hi, we took a mortgage holiday because of COVID-19. Three months ago when I looked in my Lloyds app I was “highly likely” to be accepted for an unsecured loan for “upto £50k”, but this morning when I looked I was “highly unlikely” to be accepted for anything and warnings were popping up about affecting future borrowing etc. Then this evening When I looked I was “highly likely” to be accepted for borrowing upto £35k. What gives...?!

This banners on the apps are just marketing and mean very little.  Sometimes they are offering a loan amount, sometimes house insurance, sometime car insurance, whatever... 

The value of unsecured loan you are offered through this marketing is equally meaningless "up to £35k" is also "up to £50k".  A loan of £1 also satisfies both these criteria.

The only important things are:

1. do you need a loan at the moment?
2. can you secure the loan you need?
3. is the rate fair?

Nothing else matters and, if you don't need a loan, really ignore it.

jfinnie

kpmatthews said:

With hindsight I wished I’d borrowed three payments worth on an unsecured loan, the interest would have been lower. But would a small loan have affected my future borrowing more than a mortgage holiday? Thanks for reading  

Doubtful the interest would have been lower for the same repayment term.  What's more likely is that you're paying more interest over the course of the mortgage because you're taking much longer to pay back the holiday.
Many mortgages permit penalty free partial early repayments.  If yours allows this then there should be nothing stopping you from repaying the payment holiday amount earlier rather than leaving it to accumulate interest over the course of the entire mortgage.