Personal loan shortly after buying house

Luke88

Hi all,
One thing we've thought about is if we were to apply for the loan on the day of completion (after we have the keys etc). And just put in all of our details, e.g. address as our current "old" address which will match up with our credit reports, electoral roll information etc. So rather than saying we are homeowners living at the new address we would effectively apply for the loan as if we had never bought a house, got a mortgage and so on. What are everyone's thoughts on this? Technically we would still be living at this address so I don't think it is misleading.

Regarding other points, I consider myself good at managing money. I've never really been in debt and didn't use a credit card (0% interest) until about a year ago, and I'm in my early 30s. The loan would hopefully be at 2.9% so interest would work out as about 1k over 5 years or £200 a year which is very affordable for us - I don't think this is an expensive way to have money in the bank - that's not the purpose of doing this... We want to buy a car. But if I had 13.5k in my account would I spend it all on a car? No. We may sell the car before the 5 years are up and repay the loan or just repay it early with other cash. In which case obviously the overall interest would be reduced.

We have no car currently and when we need one we get a rental which has its own cost. We haven't had a car for 4 years. We didn't "need" one and both walked to work. We haven't spent a penny on commuting during that time. For a variety of reasons a car isn't now a necessity but something we would very much benefit from.

We could of course buy a cheaper car, but the one we want to buy has just been serviced, and will have a 3 yr warranty. An older or higher mileage car would likely come with various maintenance costs in our experience. Plus we consider having a hopefully stress free car ownership experience something worth paying a bit more for. And yes, we do just want a nice car - that's a factor. I appreciate the forums are focused on saving money where possible, but I'm sure plenty on here have bought a more expensive car or spend large amounts on holidays or eating out etc. I personally always view MSE guidance and info as the best way of spending money or the most cost effective ways of doing things. Rather than just aiming to have a pile of money sitting in the bank, but sure I'd like to have that too! That's mostly the plan for the inheritance.

I genuinely do appreciate the concern that we might be putting ourselves in a precarious financial position but I'm certain that isn't the case. If our situation changed dramatically we could also sell the car as a first/last resort and take whatever hit from depreciation.

newdriver101

I don’t think it matters what address you put in because your credit file has your credit history and you will already have a hard search on your credit file by applying for a mortgage and some lenders perform a further hard search right before drawdown - with 1 or 2 hard searches it will be difficult to get a loan and if you do manage to get a loan it is unlikely it will be at the 2.9 apr advertised.  

You have been advised to wait until you get your keys before taking on further credit to avoid the bank withdrawing it’s mortgage to you - that is the primary reason to wait for the keys.  Having the keys does not necessarily mean it will improve your chances of getting a loan.

ARH_2

I took a 20k loan @ 2.9% (from nationwide as it happened, although they weren't the mortgage lender) straight after getting a mortgage. 

I waited until completion day, as I didn't want the loan to upset the purchase. I put my old rented address as my current address as I didn't actually move for a time after completion. There was nowhere on the loan application form to declare the recent mortgage or other property (just residential status still equals rented) but others may say it's slightly naughty to not volunteer the information. 

There were 2.8% deals around at the time, but I chose nationwide as I'd been a customer for a long time, and felt they were more likely to approve me. 

I agree with others that my paying £900 interest to have some money in the bank is a questionable money saving decision. However, for me having that reserve for the many unexpected costs that have come up in a very old house, and having fixed rate debt which I know I can meet with my secure salary has been invaluable. Worth every penny of the £900 to make my FTB journey less stressful, if slightly more expensive. 

Summary: You may well get approved, and at a decent rate too. You don't know if you don't apply. Consider a lender you have a long relationship with. 

foxy-stoat

Luke88 said:

Hi all,
One thing we've thought about is if we were to apply for the loan on the day of completion (after we have the keys etc). And just put in all of our details, e.g. address as our current "old" address which will match up with our credit reports, electoral roll information etc. So rather than saying we are homeowners living at the new address we would effectively apply for the loan as if we had never bought a house, got a mortgage and so on. What are everyone's thoughts on this? Technically we would still be living at this address so I don't think it is misleading.

Regarding other points, I consider myself good at managing money. I've never really been in debt and didn't use a credit card (0% interest) until about a year ago, and I'm in my early 30s. The loan would hopefully be at 2.9% so interest would work out as about 1k over 5 years or £200 a year which is very affordable for us - I don't think this is an expensive way to have money in the bank - that's not the purpose of doing this... We want to buy a car. But if I had 13.5k in my account would I spend it all on a car? No. We may sell the car before the 5 years are up and repay the loan or just repay it early with other cash. In which case obviously the overall interest would be reduced.

We have no car currently and when we need one we get a rental which has its own cost. We haven't had a car for 4 years. We didn't "need" one and both walked to work. We haven't spent a penny on commuting during that time. For a variety of reasons a car isn't now a necessity but something we would very much benefit from.

We could of course buy a cheaper car, but the one we want to buy has just been serviced, and will have a 3 yr warranty. An older or higher mileage car would likely come with various maintenance costs in our experience. Plus we consider having a hopefully stress free car ownership experience something worth paying a bit more for. And yes, we do just want a nice car - that's a factor. I appreciate the forums are focused on saving money where possible, but I'm sure plenty on here have bought a more expensive car or spend large amounts on holidays or eating out etc. I personally always view MSE guidance and info as the best way of spending money or the most cost effective ways of doing things. Rather than just aiming to have a pile of money sitting in the bank, but sure I'd like to have that too! That's mostly the plan for the inheritance.

I genuinely do appreciate the concern that we might be putting ourselves in a precarious financial position but I'm certain that isn't the case. If our situation changed dramatically we could also sell the car as a first/last resort and take whatever hit from depreciation.

Yes you can do what ever you like, its your money and your life so your set on dropping £13.5K on a secondhand car.
If you want to be 100% squeaky clean and you intend on taking out a large loan on the day of completion then you should obviously let your mortgage lender know as that would of been a question they would of asked, any planned borrowing.  Sounds like you haven't.
Put your new address on the loan application, you will be home owners with a mortgage on the day you apply for the loan so you would mis-leading the loan company as well.
What else, good luck with getting the lowest rate loan, many do not.  Lenders have tightened their lending criteria lately due to all the uncertainty and payment holidays they have suffered.
You can buy a reasonable 5 year old family car from as little as £4000 with lowish mileage.  I would start with that as you haven't had to budget for running a car for many years.  I drive a £2,000 car to work, do 15K miles and its fine, have a small budget for running costs and repairs each month.
As you will be moving into your own house you will be spending money on it, probably best to keep the borrowing to a minimum for a good year or 2.
Nothing should be taken for granted in these Covid times, things can change very quickly so if the worst should happen then you will wish your outgoings are kept to a minimum.  Yes you can try and sell the car if you lose income but I suspect you wont be happy to take a big hit on the car if you had to.
Nothing wrong with wanting an expensive car and paying for it without borrowing.  Nothing wrong with borrowing money either at a low rate over 3 years, but doing it a day after you buy a property, I would wait.

Luke88

ARH_2 said:

I took a 20k loan @ 2.9% (from nationwide as it happened, although they weren't the mortgage lender) straight after getting a mortgage. 

I waited until completion day, as I didn't want the loan to upset the purchase. I put my old rented address as my current address as I didn't actually move for a time after completion. There was nowhere on the loan application form to declare the recent mortgage or other property (just residential status still equals rented) but others may say it's slightly naughty to not volunteer the information. 

There were 2.8% deals around at the time, but I chose nationwide as I'd been a customer for a long time, and felt they were more likely to approve me. 

I agree with others that my paying £900 interest to have some money in the bank is a questionable money saving decision. However, for me having that reserve for the many unexpected costs that have come up in a very old house, and having fixed rate debt which I know I can meet with my secure salary has been invaluable. Worth every penny of the £900 to make my FTB journey less stressful, if slightly more expensive. 

Summary: You may well get approved, and at a decent rate too. You don't know if you don't apply. Consider a lender you have a long relationship with. 

It sounds like we are planning on doing pretty much the same thing except for borrowing a smaller amount, and Nationwide being our mortgage lender. I have a current account with them. Should they happen to look at that I'm planning on putting a good chunk of money in that so it doesn't look like we're desperate for the cash or anything.

I get that it's maybe a bit naughty as you say, but I don't think it's necessarily misleading. We would still be paying rent on our current address and living here at the time. We wouldn't have changed the address on anything by that point and won't have physically moved. Once the mortgage is drawn down and we have the keys, it's all a done deal. We weren't planning on taking out a personal loan when we did the mortgage application 6 months ago so I don't think we mislead anyone at that point either. Like you say, if there is no place to volunteer that information then it's somewhat irrelevant.

In any case Nationwide would be getting our business, and I would imagine they would see us as low risk given our credit history which is spotless. Neither of us have had trouble getting the best rates/0%, and obviously we got the mortgage approved. Regarding multiple hard searches, they would be able to see that Nationwide themselves did a hard search, they did actually do 3 in total so far. But we've disputed these with credit agencies and nationwide have already agreed to remove 2 of them. So only 1 will show. I'm aware they could do another hard search but don't believe that's guaranteed.