Personal Loan affecting how much I can lend

michthedolphin

Hi, could do with some guidance please!

I tried applying for Decision in Principe (with nationwide) but they won't give me the amount I expected.

My only monthly debt is a personal loan I took out a few years ago (£200 per month with about £8000 balance owing). With just this loan my DTI ratio is 6.1%.

With travelling expenses per month (£150 Tax/Insurance/Fuel) my DTI ratio is 10.9%.

I tried applying again but this time I ticked the option to pay off loan (£0) when mortgage begins and they offered me the full amount (I also put the same travelling expenses at £150).

So obviously they don't like loans and is affecting how much I can borrow.

I'm not in a position to pay off the loan completely, however I have asked the loan company if I pay off £3000, this would reduce my monthly payments to £117.

Which now gives the following DTI ratio of 3.7 %.... 8.3% with travelling expenses.

So do you think I should pay off £3000 towards loan, wait for the credit report to update new balance (approx £5000) and then apply again? Do you think they will then give the full amount ?

Thanks for any advice!

ACG

The loan amount is not really based on the balance of the loan but the repayments. 
Do the affordability calculator with the loan amount as you can plan to have it and see what happens. You do not need to keep doing DIPs, that takes longer. 

Is there any reason why you have stuck to Nationwide? I did a DIP with them last week, 2 other lenders would lend almost £100k more than Nationwide. 

michthedolphin

Great thanks for the help ACG!

I did the "How much can I borrow" calculator on nationwide, based on my income its offering about 8k more than I intend to borrow.

Only picked nationwide as been through them before (purchase didn't go ahead) and it was straight forward, but as you say may have to try elsewhere.

Thanks for the help!

TheBanker

Have you thought about talking to a broker? They will know how various lenders are likely to deal with your loan repayments.