Financing real-estate purchase — multiple personal loans — simultaneous application

Mars_Robertson

I would like to buy a piece of real-estate worth around £40-50k

I have some savings but I need to play the financial game right to be able to afford it, as well as maintain liquidity to afford basic refurbishment.

The personal unsecured loan (at around 5% APR) appears much better than the bridging loan which is typically around 1% per month (and incurs loads of additional fees).

I'm wondering if it is technically possible to apply for multiple loans simultaneously, all at the same time, and be accepted to all of them?

I'm aware of the consequences.

Some basic research:

• Link 1: moneyexpert.com/loans/ask-an-expert/can-i-have-multiple-personal-loans-at-once/

Impact on credit score – the more loans you apply for, the more your credit score will be checked. Lenders will be able to see your applications and approvals for other loans, so they may consider you a higher risk.

• Link 2: providentpersonalcredit.com/money-matters/borrowing-money/can-i-apply-for-more-than-one-loan-at-a-time/

It's the credit check which can cause you problems. Not in terms of whether the lender will accept the application, but in how lenders will view the number of applications you make. Your credit report records these credit checks, known as hard search.  Each hard search can lower your credit score.
So, if you’ve made many credit applications at once it can significantly reduce your rating. This may make it harder to get credit that requires a good rating like a car on finance or renting a house.

Applying for multiple loans will affect my credit score.

Obtaining multiple loans will affect my credit score.

But if I apply for the loans all at once - I don't think "the system" will know and I should be able to pull it off?

Bear in mind that I have an exit strategy (Buy Refurbish Refinance Rent BRRR) and see this real-estate as income generating asset, I just need to use my credit wisely.

(already started testing American Express to PayPal "pay friends and family" to see if my girlfriend can transfer to my bank account)

Thank you very much for advice, I understand that what I do is risky and it's effectively "1 way street" with my credit score. Not sure if I want to do it. I'm still evaluating options and would like to know if that strategy could possibly work?

Mars_Robertson

For the record, I have no intention of defaulting like with COVID loans: theguardian.com/world/2022/jul/28/taxpayers-left-with-421m-bill-after-one-in-12-firms-default-on-covid-loans

I just want to access my financial liquidity.

MorningcoffeeIV

First off, you do not have a credit score. You have credit history and it's this that lenders wil assess you on.

Whether you get the loans will depend on your history and affordability. Applying simultaneously MAY reduce lenders seeming some of the others searches. But it may not, where they're done in real time.

DullGreyGuy

Applying for a loan you typically have to declare the purpose of the loan, almost universally loans exclude for funding property purchases and so either you'd be looking at fraud by giving a false purpose or breaching the terms by using it against the purchase.

What is stopping you getting a mortgage?

Mars_Robertson

For some reason I assumed mortgage is not available for this property.

I will contact a broker to find out.

(I'm worried I want to borrow too little)

MalMonroe

Hi, I think contacting a broker is a great idea. 

I'm wanting to apply for a mortgage in the next couple of years for an amount even lower than one you'll be requiring so I hope it's not too little.

At least consulting someone who is in the know will be a good starting point. 

DullGreyGuy

Mars_Robertson said:

For some reason I assumed mortgage is not available for this property.

I will contact a broker to find out.

(I'm worried I want to borrow too little)

Why?

£25k I believe is the minimum mortgage amount though individual lenders may have a higher minimum loan value. Obviously also depends if its a commercial mortgage for a BTL or a personal mortgage