Value of loan...

Joe10

Hi

I currently have a loan with an outstanding balance of £7500. The interest rate isnt great (13.5%) and i was hoping to get a loan at a better rate of 4 or 5% and pay the old one off but unfortunately after carrying out eligibility checks on various sites (post office, m&s and a few others) i cant get one to beat my current interest rate.

I live in rented accommodation and due to move into a house thatll ill own with a mortgage next week. Will having a mortgage increase my chances of a better rate? Could it decrease those chances? Do banks see me as more reliable if i have a mortgage?

The same question goes for credit cards too. Am i more likely or less likely to get a better offer.

Thanks 

Sncjw

So you want a consolidation loa. Which will double your debt. Taking the current debt and the new loan it would be 15k of debt as the new loan provider can't garuntee you will pay off the current loan.

I'm guessing your income would be close this amount so that's probably why you won't get a better rate even then your not garuntteed to get the rate shown. 

Joe10

Yea it would be seen as a consolation loan to lenders. If i were to double my loan it would make up 1/3 of my salary.

Can being a homeowner affect your worthiness to banks?

Grumpy_chap

Given you are due to move and take out a mortgage in the next week or so, focus on that as the priority. 

Don't go applying for anything else as it may appear to the mortgage lender that you have just taken additional credit and they may pull the mortgage approval if they do checks at completion.  I don't need to explain the disaster that would be.

After you are moved in, look to create a stable history for at least 6 months before you start to consider any refinancing or anything else.  

Joe10

Good advice. Ill not be applying for any credit before i get the keys and ill take stock of where i am and then make a decision once im settled.  Im just hoping being a homeowner will give me a better rate

Sasahara

Probably a bit too late, but you should have got a mortgage £7,500 larger than the one you have, the interest rate on that would be hard to beat.

If that was not possible then getting a better loan rate is unlikely too.

As per the above advice, wait at least 6 months and try some soft search loans quotes.

Joe10

Sasahara said:

Probably a bit too late, but you should have got a mortgage £7,500 larger than the one you have, the interest rate on that would be hard to beat.

If that was not possible then getting a better loan rate is unlikely too.

As per the above advice, wait at least 6 months and try some soft search loans quotes.

I didnt know this was possible. Is it really? If so then im silly for not trying it. 

GrumpyDil

It depends. It would reduce your loan to value and assumes you had enough deposit to use part of the deposit to clear the loan and still have enough deposit for your purchase. 

femalemonarchfemalecanine

Joe10 said:

Yea it would be seen as a consolation loan to lenders. If i were to double my loan it would make up 1/3 of my salary.

Can being a homeowner affect your worthiness to banks?

you are likely to be looked on more favourably if you own rather than rent. obviously it is just one factor that is taken into account.

Joe10

Thanks for that. Lets hope thay factor will be a major factor for me 

sammyjammy

Sasahara said:

Probably a bit too late, but you should have got a mortgage £7,500 larger than the one you have, the interest rate on that would be hard to beat.

If that was not possible then getting a better loan rate is unlikely too.

As per the above advice, wait at least 6 months and try some soft search loans quotes.

No no no, might have been a a lesser interest rate but is payable over a lot longer period of time and is then secured on the OPs property.  

OP stick with what you have and try and over pay it when you can.