How to obtain a loan.

dolphinarium

My son has built up credit card debts over a number of years and has moved the debt between interest free cards. We are trying to deal with his gambling habit, which is not really what my post is about. He recently decided to transfer his mortgage over to his partner, as security for the family, if we can't sort out his habit.
Unfortunately, we didn't foresee that his ability to get a loan, or get more card transfers, would be seriously affected. 
His income is good and he has never missed a payment, which I have confirmed. His credit rating is 600.
We decided a loan would be the way to go but soft searches indicate that it would be difficult for him to get a loan now.
Can anyone suggest where we might get a loan as the cards he has used are now kicking in to 25% A.P.R.
Advice would be preferred to judgement please.

CliveOfIndia

The score you see on your credit report has no bearing at all on your ability to obtain credit.  It's not used - not even seen - by any lender.

Consolidation loans are rarely a good idea, for a couple of reasons.  Firstly, unless the underlying cause of the debt is addressed, it's all too easy to use a loan to clear the cards, then start spending on them again, meaning you'll very soon find yourself saddled with twice the debt.

The other problem is affordability.  A lender has no guarantee that you would actually use the loan to clear the credit cards.  They therefore have to take the view that a loan would be in addition to, not instead of, the credit card debt.  This means that when they run their affordability checks you could well find you're declined, or else offered an APR that is less than favourable.

A good place to start is to head over to the Debt-Free Wannabe board, post up an SOA and you'll receive plenty of helpful advice.

dolphinarium

Thanks. I will try that. 

MalMonroe

dolphinarium said:

Thanks. I will try that. 

Hi, you could also ask your son to contact one of the free debt help agencies.

StepChange, National Debtline or Citizens Advice - info for all of them online. They don't judge, they are very knowledgeable and they help people to get out of debt. I always recommend StepChange because they helped me when I was feeling very desperate about my financial situation.

Doesn't matter how anyone got into financial difficulty, they help people to get out of it. Without judgement, as I say.

Gambling is now acknowledged as an addiction, in the same way that drugs and alcohol are and is treatable on the NHS. There's some info in the following link - if your son would be open to such a thing -

https://www.nhs.uk/live-well/addiction-support/gambling-addiction/

Hope some of that's helpful. 

enthusiasticsaver

If he is not able to get 0% deals any more then he will not get loans at a decent rate.  As said on both this thread and the one you posted on DFW a debt consolidation loan is a very bad idea anyway.  He needs to do a proper budget and make a plan to repay the debt or if he cannot do that then he could  look at doing a DMP (debt management plan) either self managed or through stepchange/payplan.  That depends on his income and expenditure and how much spare he has to go towards his debt each month. 

First he needs to make sure he has support for stopping the gambling either from GA or another stop gambling charity and then he needs to do an soa to see what his financial position is.  Link below. 

SOA Calculator (lemonfool.co.uk)

If he does the soa and formats it for  MSE he could post it on the DFW board.  It is best if he does it himself rather than you doing it for him. 

cymruchris

If he has had some debts for quite a period of time, and the total value owed hasn't decreased (and if anything has increased) - then lenders will see that pattern and classify his risk of default accordingly. If using his details he's getting APR's of 20+ percent offered, then he's in one of the higher risk categories. As you say he's never missed a payment, but the way the lenders look at it, is that if he owes £15k across his credit cards for example, and decides he wants a £15k loan to pay them off - the loan provider has no guarantee that that's what he will do with the money. He could (Although I'm sure he wouldn't) just go down the betting shop (a generalisation) and blow it all on the geegee's. So when they look at the application for £15k - what they're really doing is assessing the risk on £30k. As a result of past behaviours in terms of paying debt, this pushes him into a category where the interest rates are considerably higher.

The only way to 'improve' this - is to pay down some of the existing debt another way.

I appreciate you've mentioned there's a potential for a gambling problem - how far along the path of dealing with it is he at the moment?

It needs a very cold, hard look at the finances to see what can be culled or cut-back. It could also be a time to start selling off 'stuff' from around the house on ebay and fb marketplace. Every single pound that can be thrown at the debt will improve his position. It's not a quick-fix though, improvement to credit history takes time.

phillw

dolphinarium said:

He recently decided to transfer his mortgage over to his partner, as security for the family, if we can't sort out his habit.

That's a red flag there.

A mortgage company willing to take someone off the mortgage who lives in the property? Presumably he's been taken off the land registry too.

I have no idea why they would do that

Plus, they can reverse that transfer if he goes bankrupt & make the bankruptcy order last longer due to unfit conduct.

MrFrugalFever

phillw said:

dolphinarium said:

He recently decided to transfer his mortgage over to his partner, as security for the family, if we can't sort out his habit.

That's a red flag there.

A mortgage company willing to take someone off the mortgage who lives in the property? Presumably he's been taken off the land registry too.

I have no idea why they would do that

Plus, they can reverse that transfer if he goes bankrupt & make the bankruptcy order last longer due to unfit conduct.

Hopefully, if it comes to it, he’ll speak to the likes of Stepchange who will guide him on the right path (I.e. DRO/DMP/IVA) as opposed to Bankruptcy for this very reason, however, the support and info from the likes of Stepchange will only be as good as the information it receives. What I mean is if the omission of the mortgage being transferred recently could land him in a heap of bother.

I believe that would be treated as the same as gifting large amounts of money prior to going BR to the OR?