Personal loan shortly after buying house

Luke88

Hi all,
Myself and partner are shortly due to complete on a house, with our lender being Nationwide.

We wanted to wait until completion before purchasing a car. We are looking at getting a personal loan of £13.5k, and put in all our details to get a "quote" on the Nationwide site for the loan as well. It said prior to filling in the details:

• Acceptance indicator - know if you’re likely to be accepted before you’re credit scored.

At the quote stage it did still say the APR would be 2.9%. Is that what they mean by acceptance indicator? I assume the APR would be higher if based on our details they wouldn't accept us? It also said the application would need to be reviewed by someone alongside the hard credit search. Presumably this would be to just manually confirm the details we have given match up.

Other general questions: Does it look "bad" somehow to be applying for a loan straight after getting a mortgage etc? Would it better/worse/make no difference to get a loan from a different lender?

Would we potentially have problems with credit reports not updating immediately to reflect we have a mortgage/new address? And as a result be rejected e.g. we will say at that point we are homeowners with a mortgage with address X, but our credit reports will suggest we rent at address Y. We wanted to purchase the car a few days after completing rather than waiting a month or longer. 

The loan is affordable for us and would be spread out over 5 years. We didn't have much trouble getting a mortgage with Nationwide after applying all the way back in June and they indicated at AIP stage we could borrow much more than we have done.

Thanks in advance!

[Deleted User]

It's not that it looks 'bad' but that lenders will take into account your new mortgage when assessing you for acceptance.  

The likelihood is that you may struggle to get credit for a while after moving, at least until your credit files catch up, and likely for several months longer.

Plan for living with a cheaper car paid by cash and you won't be disappointed.

newdriver101

The 2.9 APR is only representative/indicative - you would never know the exact apr until after you applied... But as zx81 said, it would be difficult to get a loan (from any lender) after a mortgage...  Even if you did manage to get a loan, it is unlikely you would get 2.9 (or a decent apr) straight after a mortgage application... It is generally advised to wait a few (or several) months after your mortgage before applying for additional credit

DCFC79

Have you considered something less expensive ? 

Luke88

DCFC79 said:

Have you considered something less expensive ? 

Thanks for all replies.

We have; we could obviously get something cheaper, but could get something more expensive as well. I wouldn't say we were stretching ourselves. We were going to have a larger mortgage by about 20k but the house was downvalued.

Our credit ratings are good-excellent currently. MSEs own eligibility calculator for loans suggests 95% for various loans around 3% APR so would suggest it's likely we would get this. It seems strange that it would be more difficult after having a mortgage on file which should demonstrate we manage money responsibly etc.

We will be low ish on cash post house completion, hence the need for a loan but have a decent combined income.

monetxchange

You're going to be low on cash post completion yet you want to take on a large debt to buy a car? Just don't. Save up for a few months and buy a run around. There's no point starting your home owner journey laden with debt. As this year as shown, things can change in an instant. It might be affordable now, but what if one of you loses your job and then you're stuck with a big loan which risks you not being able to meet mortgage payments? Stay focused on what your goal has been - getting your new home and protecting it going forward.

Also, don't take on any new credit before completion. Look on the mortgage board at people who have done this and it's flagged up as an affordability issue when mortgage lenders have done a final credit check before completion.

macman

Just having a mortgage doesn't demonstrate anything about your financial responsibility. Paying it off on time every month does.
New houses invariably mean large unexpected bills. On day 1, suppose you find the boiler is on it's last legs and needs replacement: that's £2K you have to find. First time buyers perhaps?

Luke88

monetxchange said:

You're going to be low on cash post completion yet you want to take on a large debt to buy a car? Just don't. Save up for a few months and buy a run around. There's no point starting your home owner journey laden with debt. As this year as shown, things can change in an instant. It might be affordable now, but what if one of you loses your job and then you're stuck with a big loan which risks you not being able to meet mortgage payments? Stay focused on what your goal has been - getting your new home and protecting it going forward.

Also, don't take on any new credit before completion. Look on the mortgage board at people who have done this and it's flagged up as an affordability issue when mortgage lenders have done a final credit check before completion.

Yep there's no chance we will make any application before completion, won't be taking any risks there.

The loan repayments would represent less than 10% of our combined disposable income. Either one of us could afford it independently of the other.

I appreciate the advice and of course there's always a risk especially these days of losing income. Very fortunately, neither of us were furloughed, or have been at risk etc.

Aside from that, I'm set to receive a 5 figure inheritance which has been delayed due to Covid. Even if I had already received that I would consider a loan or slightly smaller loan to have the security of that money in the bank for the unexpected. 

foxy-stoat

Sounds like your set on spending £13K on a car using finance, even if you have the cash you will still take out a loan.

Go ahead and apply once your completed and in the new property.  The rate offered will be the rate based on your risk profile, nothing to do with MSE eligibility checker, your credit score or the rate the lenders use in their marketing blurb or web sites.

Good luck and let us know what rate your offered.

monetxchange

Taking out a loan and all the interest that comes with it is an expensive way of 'having some money in the bank'. Now's the time to really look at your budget when you're in your new place, and making sure it's watertight so you can also start to save your own money for a rainy day and for things like new cars.

Grumpy_chap

Getting a house always comes with extra expenses that you won't have planned for.  It may be prudent to complete the house purchase and allow the first 12 month to settle into a new financial "rhythm" before looking at more "optional" large purchases like a car.  Can you keep current car for longer or accept a more affordable car that you can buy outright in the mean-time?