Loan Application issues.

Jay_Hawkins

I have a work colleague who's had to sell his house, due to a divorce and has moved in with his mother. He has £100,000 sitting in his bank account, that he needs to put towards buying a new home. He's looking at a flat and needs to borrow more money, but he needs less than the minimum mortgage amount (£20,000 I think). He also wants to avoid paying £1000 mortgage fees (can this be avoided?) He's tried to obtain a personal loan from a bank (including his own, where he's banked for 20 years) and been rejected, twice. I mentioned going through MSE eligibility calculator and Hitachi came back with a 3.2% APR rate and 96% probability of obtaining a loan, but when he applied, the APR shot up to 24%!!!! He has a credit score of 999. I can only assume its his mothers address that's causing the issue, as she's a pensioner, with no credit history, but as he's lived their less than a year, surely his old address, should be taken into account? Does anyone have any advice on how my friend could obtain the additional funds he needs, to buy his new flat, that won't cost him a fortune to do? 

Any help would be greatly received, as this is a new problem for me, that I've not encountered before" 

[Deleted User]

It's neither his credit score nor his mother's address which are factors in the decision, but his history, affordability.and reason for the loan, assuming he told the truth.

He should look at a mortgage, assuming his credit worthiness is sufficient. He should check his three files and also use a broker if he history is less than ideal.

Jay_Hawkins

I've seen his credit score. He's just paid off a mortgage. Has £100,000 in the bank. If he applies for a mortgage, then he needs to pay mortgage fees. A loan, to buy a home is causing the issue, we think. Not sure why? 

DrEskimo

https://www.nerdwallet.com/uk/mortgages/no-fee/

HSBC will lend them £10,000 with no mortgage fee at 1.14% APR fixed for 2years.

Even all the other lenders with no fee are under 2%, which will beat any personal loan.

[Deleted User]

Jay_Hawkins said:

I've seen his credit score. He's just paid off a mortgage. Has £100,000 in the bank. If he applies for a mortgage, then he needs to pay mortgage fees. A loan, to buy a home is causing the issue, we think. Not sure why? 

His credit score plays no part in lending. 

He really does need to go and check his credit files.

And lenders don't like lending unsecured for property, which is why he needs a mortgage.

Jay_Hawkins

OK, his credit report doesn't have a record of his new address (mums address) only his old address, so when he's applying for a loan and putting in his new address, there is a conflict of information. Would this effect his loan chances? 

[Deleted User]

Yes, that's one issue.  But keep checking all three files (not just Experian) so he has a complete picture.

Then he'll have an understanding of his situation and what to do next.

Jay_Hawkins

zx81 - Thats been very useful. Thank you. We hadn't considered anyone other than Experian. I've personally had to write to Equifax in the past, but forgot all about them! 

[Deleted User]

He can obtain his Equifax credit file free using ClearScore and his TransUnion report from Credit Karma. 

Jay_Hawkins

DrEskimo said:

https://www.nerdwallet.com/uk/mortgages/no-fee/

HSBC will lend them £10,000 with no mortgage fee at 1.14% APR fixed for 2years.

Even all the other lenders with no fee are under 2%, which will beat any personal loan.

He was rejected by HBSC, as the £10,000 mortgage was too low a value. They would lend him more though! 

Deptfreemoneytart_2

I have an issue with Sainsbury's Banks loans. 
When I go onto the banks loan calculator and ask for a £20,000 loan over 6o mths (5 years) for home improvements, it tells me this will cost me £375 per mth. for 60mths. So I complete the forms and am told I will be accepted 100% for the loan. I think that's great, until I complete the forms and it says my monthly payment will be £427.65. Instead of charging me a fixed 2.8% interest they want to charge me 9.1% interest.
Now the 2.8% is apparently a "representative figure" and only 51% of applicants are likely to get that figure (one has to do a lot of concentrated reading to come across this information). I think to myself with a credit rating of 999 (the maximum one can get) I should be well into that 51%, but NO. I can only assume that at 73 years of age, Sainsburys are playing their age card, although they do say that anyone up to 83 years can ask for a loan.
All of my money coming in is guaranteed pensions, I've cleared my mortgage and have little dept.
So, WHY.
Should I take this to the Financial Ombudsman? If not what else can/should I do.