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Taking out a loan for new home improvements - Timing query...

michaelsft
michaelsft Posts: 69 Forumite
Ninth Anniversary 10 Posts Combo Breaker
Hi all, I am in the process of buying a new home that needs extensive renovations. I've received quotes and decided that because a lot of things are pretty urgent my best bet is to take out a £20k loan to get the rood, windows, doors and electrics done asap. I have no other debt apart from my mortgage, my credit rating is 'excellent' and I earn well so I can afford the repayments without any issue. My query though is when is the best time to apply for this loan?

If I did it before completion I believe I'd have to inform the mortgage lender and that could affect my mortgage offer but if I do it after completion then I won't be registered at the new address for anything for a while and I'm unsure if that will affect my chance of getting the loan. Can anyone offer any advice on when it would be appropriate to apply?

I do have a credit card with a zero balance and £13k limit so it's possible I could use that in the short term for the most vital work (roof and electrics) if I can find a tradesperson who accepts card payments but I would prefer to get the loan if possible to save the hassle of moving money around later.

Thanks for reading
Michael

Comments

  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    edited 26 May 2021 at 10:50AM
    Don't apply for any new credit until you're in your new home.

    You may find it hard to be accepted immediately after moving, but you can use that time to both save and to check through your credit files to see that everything is in order. Disregard the 'excellent' rating and focus on the data that appears on each, as that's what lenders will be looking at.
  • michaelsft
    michaelsft Posts: 69 Forumite
    Ninth Anniversary 10 Posts Combo Breaker
    Thank you for the reply. I can wait until I get in there, any idea though of how long I should be waiting to apply? The work is very important. Perhaps I'll use the credit card for the most important stuff if I can find tradespeople willing to take card.
  • FaceHead
    FaceHead Posts: 737 Forumite
    500 Posts Second Anniversary Name Dropper
    Apply straight away after completion. Use you current address. I'm assuming you're renting, and have been there for some time, and might have a short overlap, so that you can say you still live there on the day after completion. 

    Credit cards are also a good move if you can get zero percent, whilst a loan will realistically be 2.8-10%. 

    I took out a 20k loan the day after completion, and also got 0% credit cards of just over 20k again in the following months (narrowly pre-covid). As a result the loan has been a contingency pot, which is invaluable peace of mind, so I am happy paying interest on it to have the contingency available when going into an unknown project. 
  • FaceHead
    FaceHead Posts: 737 Forumite
    500 Posts Second Anniversary Name Dropper
    Thank you for the reply. I can wait until I get in there, any idea though of how long I should be waiting to apply? The work is very important. Perhaps I'll use the credit card for the most important stuff if I can find tradespeople willing to take card.
    Tradespeople probably won't take a card, and if they do they'll be passing the extra cost onto you. You can however buy materials with it, all you bills etc. and so free up your whole salary less mortgage for the works. 
  • michaelsft
    michaelsft Posts: 69 Forumite
    Ninth Anniversary 10 Posts Combo Breaker
    FaceHead said:
    Apply straight away after completion. Use you current address. I'm assuming you're renting, and have been there for some time, and might have a short overlap, so that you can say you still live there on the day after completion. 

    Credit cards are also a good move if you can get zero percent, whilst a loan will realistically be 2.8-10%. 

    I took out a 20k loan the day after completion, and also got 0% credit cards of just over 20k again in the following months (narrowly pre-covid). As a result the loan has been a contingency pot, which is invaluable peace of mind, so I am happy paying interest on it to have the contingency available when going into an unknown project. 
    Hi there, I'm not renting, I'm selling my flat and buying a house. I guess I could apply using my current address as soon as I get confirmation of completion that same day. Is that allowed?
  • FaceHead
    FaceHead Posts: 737 Forumite
    500 Posts Second Anniversary Name Dropper
    FaceHead said:
    Apply straight away after completion. Use you current address. I'm assuming you're renting, and have been there for some time, and might have a short overlap, so that you can say you still live there on the day after completion. 

    Credit cards are also a good move if you can get zero percent, whilst a loan will realistically be 2.8-10%. 

    I took out a 20k loan the day after completion, and also got 0% credit cards of just over 20k again in the following months (narrowly pre-covid). As a result the loan has been a contingency pot, which is invaluable peace of mind, so I am happy paying interest on it to have the contingency available when going into an unknown project. 
    Hi there, I'm not renting, I'm selling my flat and buying a house. I guess I could apply using my current address as soon as I get confirmation of completion that same day. Is that allowed?

    If you're completing on both the purchase and sale simultaneously, it's mildly dubious to claim to live at the flat once you've got confirmation that you've sold it and bought the new house. In your shoes, however, I'd do that. 
  • superbigal
    superbigal Posts: 611 Forumite
    Part of the Furniture 500 Posts
    Too late to keep some of your profit from sale of Flat as opposed to using it all as a deposit ?
  • michaelsft
    michaelsft Posts: 69 Forumite
    Ninth Anniversary 10 Posts Combo Breaker
    The profit from the sale is all deposit, I'm at my limit budget wise and paying my solicitors fees using my savings. It might sound like I'm over stretching but opportunities to buy a house in my price range in my area are very limited and despite the work that needs doing, it's still a good deal. If I don't do it now, I may never be able to do it so I'm biting the bullet and going for it.
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