Confused re: sudden change in eligability

JBL2000

Hey Everyone,

Looking for some understanding as to why my preferred lender would make such a decision as to brand me unlikely to get a loan. I don't really understand why and would like some potential insight into why.

So the long story short is that I have been with same bank over a decade. Approx 18 months ago I took a loan for £12,000. It was over 36 months but I paid it off in just over a year and a half. They made a boo-boo and didnt close the account properly (I owed £23 but they took £330 etc etc). I also closed my credit card months ago so literally, now my only debt is an iphone over 24 months and the mortgage. I also have ~ 6 months expenses cash in the bank and work at an incredibly stable company.

Whilst I had that loan they were happy to loan me up to 40K at 2.3%. Now the loan is paid back they are not interested in loaning me money. I dont really need to borrow the money but I would like to understand why it literally changed so much in 2 months, when no other things have changed.

Surely, if anything, it makes me a better risk? As I say, i am not bothered as such, just interested to understand as to the potential why.

DCFC79

They just dont want to lend to you simple as.
Maybe its because they didn't make money off you as you cleared the loan off in 18 months. They can choose who they lend to.

Grumpy_chap

May not be anything to do with you being a bad risk, or even a good risk for that matter.

Banks have massively tightened the availability of money across the board.  Part of that means less promotion of "guaranteed" loans.  With or without the marketing, what you would actually be able to borrow is very similar to what it was, but you don't actually want to borrow so why does it matter?

JBL2000

The reason it matters is mortgage fixed rate comes to an end in 3 months   Other than that I just find it odd that lterally 16 days make so much difference!

Grumpy_chap

Irrespective of score, have you checked your credit file that there is no erroneous data?
Stability will help over the next 3 months to get the mortgage deal.

macman

Closing your credit card account didn't help. Lenders like to see a record of credit being used and repaid regularly on schedule, and you now have a limited history.
Do you have no other credit accounts, such as household utilities?
On the electoral roll?

[Deleted User]

JBL2000 said:

The reason it matters is mortgage fixed rate comes to an end in 3 months   Other than that I just find it odd that lterally 16 days make so much difference!

What does not being offered a loan have anything to do with your mortgage fixed rate ending? 

JBL2000

Lover_of_Lycra said:

JBL2000 said:

The reason it matters is mortgage fixed rate comes to an end in 3 months   Other than that I just find it odd that lterally 16 days make so much difference!

What does not being offered a loan have anything to do with your mortgage fixed rate ending? 

Hi, I was thinking it will have an impact because they are both with same lender and also if I cant get a loan, what does that say about getting a mortgage, that was all.

sourcrates

Banks are there for their benefit, not for yours, loans and mortgages are two entirely different products, you paying your loan off early, may have added a little star, next to your name on their internal records, as this action has cost them money, money they didn`t make in interest from you.

Now it was probebly not that much, but multiply that figure across their loan book, so that if everyone paid there loans early, it would cause the bank a significant loss in profits.

They may just remember this the next time you apply for a loan, its better for them to loan to those who repay in full, over the full term, rather than those who settle early.

Now it might not be applied every time, or even at all, but banks have ways of whittling out those who cost them money, and those that make money for them.

kimwp

You can apply for your mortgage renewal six months in advance I think. 

Thrugelmir

JBL2000 said:

Whilst I had that loan they were happy to loan me up to 40K at 2.3%. 

Did you actually apply?  Or was it the marketing spin that says potentially in the small print.