Why Can't I Refinance My HSBC Loan at a Lower Rate?

Isthisforreal99

Sasek said:

ManyWays said:

At the moment you are borrowing at 9.9% to invest in a privately held company and to keep money in your stocks and shares ISA. This isnt sensible if you have cash flow problems because of your rent rises.

Other people have explained that no one wants to lend you an extra 20k.Wishing they would isnt going to change that fact.

Why not take the 18k out of the S&S ISA and set up a monthly savings into the ISA of something affordable, say £250. And obviously clear the credit card.

I really don't want an extra 20K. I want to lower my interest rate. I already cleared my credit card (the balance on there is now 0) but I don't want to use the ISA money to pay off the loan. The reason being is there is a chance I might loose my job in the near future and if that happens, I will use that ISA money to 1. Make my monthly loan payments and 2. For living expenses while I sort things out. 

I really struggle to accept the 'that's how it is' attitutude. If I can shop around for so many things these days, why shouldn't I be able to shop around and get a better interest rate? After all, that's what the MSE Newsletter is all about. That's what the TV show is all about = be a smart consumer and get the best deal!

To 'shop around' anywhere you need to be able to afford to shop there.

Just ran aome figures through the MSE Eligibility checker and not one lender will offer a £20k loan to someone on £32k paying £800 pm in rent. And that's with no other current debts.

How you got the original £25k loan remains a mystery.

Nasqueron

Sasek said:

ManyWays said:

At the moment you are borrowing at 9.9% to invest in a privately held company and to keep money in your stocks and shares ISA. This isnt sensible if you have cash flow problems because of your rent rises.

Other people have explained that no one wants to lend you an extra 20k.Wishing they would isnt going to change that fact.

Why not take the 18k out of the S&S ISA and set up a monthly savings into the ISA of something affordable, say £250. And obviously clear the credit card.

I really don't want an extra 20K. I want to lower my interest rate. I already cleared my credit card (the balance on there is now 0) but I don't want to use the ISA money to pay off the loan. The reason being is there is a chance I might loose my job in the near future and if that happens, I will use that ISA money to 1. Make my monthly loan payments and 2. For living expenses while I sort things out. 

I really struggle to accept the 'that's how it is' attitutude. If I can shop around for so many things these days, why shouldn't I be able to shop around and get a better interest rate? After all, that's what the MSE Newsletter is all about. That's what the TV show is all about = be a smart consumer and get the best deal!

You have to declare on application if you are aware of any change in personal circumstances that you know about, to not do so is fraud. Losing your job is even more of a reason not to take out another loan especially if you get made redundant and suddenly have to admit to the bank you knew you were at risk and get slapped with a CIFAS marker

Sasek

Why do a lot of the answers seem to have a bit of a hostile undertone? I never said I was told that I would loose my job. I said something to the effect of I may not have it in the future (If I expressed it incorrectly here, I apologise). I don't currently have any information about the company planning to make me redundant, nor do I have any plans to quit so if I fill out the application for a loan, I would NOT be lying or misrepresenting anything. However, external conditions may change - as an example, if my parents need me to care for them in the future, I may decide to quit my job and do that. Again, I do not have any immediate plans to do that but anything can happen and I need to cover all my basis. Even if the worst were to happen, I still plan to make my loan payments and to pay off the loan eventually. So - there is and never will be any fraud here. 

My question in the forum was How to refinance my HSBC Loan at a lower rate? If the answer is: NOT POSSIBLE, then fair enough! I had a certain idea of how financial things might work (in particular that it would be possible to move my current loan to a different bank under better conditions = interest rate) but if it turns out that's not how things work, then OK. I guess things in the United Kingdom work differently than in other developed countries (where it is possible for one bank to pay off your loan balance directly at another bank) but again - fair enough!

Here is what AI says: 

Refinancing a Loan in the UK: How it Works

To answer your primary question: Yes, it is absolutely standard practice in the United Kingdom for one bank to pay off your loan at another bank.

This process is commonly called refinancing or a debt consolidation loan. Here is how it works:

1. Application: You apply for a new loan with "Bank B" (e.g., Tesco, M&S, etc.). During the application, you state that the purpose of the loan is "debt consolidation" or to "refinance an existing loan."

2. Settlement Figure: If your application is approved, you will need to get a "final settlement figure" from your current lender, "Bank A" (HSBC in your case). You already have this figure: $18,215.41. This is the exact amount required to close your loan account, including any early repayment charges or interest due.

3. The Transfer: Bank B will then typically do one of two things:

   • Direct Payment (Most Common): They will send the settlement amount directly to HSBC to pay off the loan on your behalf.

   • Payment to You: Less commonly for loan consolidation, they might deposit the full loan amount into your personal current account, and you are then responsible for immediately transferring the settlement figure to HSBC yourself.

4. New Loan: Once the old loan with HSBC is paid off and closed, you are left with just the new loan with Bank B, at the new, lower interest rate and with new monthly payments.

So, your initial understanding that you should be able to "move your current loan to a different bank under better conditions" is entirely correct. 

kimwp

The way you phrased it-

"The reason being is there is a chance I might loose my job in the near future and if that happens, I will use that ISA money to 1. Make my monthly loan payments and 2. For living expenses while I sort things out. "

Would be something that a British person would probably only say if they had knowledge of something that might cause them to lose their job eg redundancies being discussed.

But the tones of the posts are pretty neutral and factual apart from one.

ManyWays

ChatGPT is wrong; what they call "direct payment" is pretty unusual in the UK for unsecured loans. You could ask ChatGPT for the source of that statement and to list the lenders who do this. 

Of course, there is nothing wrong with shopping around. But you are asking for suggestions from the people here as they have some experience, and no-one here thinks its likely you will be able to refinance this very large loan. 

Nasqueron

Sasek said:

Why do a lot of the answers seem to have a bit of a hostile undertone? I never said I was told that I would loose my job. I said something to the effect of I may not have it in the future (If I expressed it incorrectly here, I apologise). I don't currently have any information about the company planning to make me redundant, nor do I have any plans to quit so if I fill out the application for a loan, I would NOT be lying or misrepresenting anything. However, external conditions may change - as an example, if my parents need me to care for them in the future, I may decide to quit my job and do that. Again, I do not have any immediate plans to do that but anything can happen and I need to cover all my basis. Even if the worst were to happen, I still plan to make my loan payments and to pay off the loan eventually. So - there is and never will be any fraud here. 

My question in the forum was How to refinance my HSBC Loan at a lower rate? If the answer is: NOT POSSIBLE, then fair enough! I had a certain idea of how financial things might work (in particular that it would be possible to move my current loan to a different bank under better conditions = interest rate) but if it turns out that's not how things work, then OK. I guess things in the United Kingdom work differently than in other developed countries (where it is possible for one bank to pay off your loan balance directly at another bank) but again - fair enough!

Here is what AI says: 

Refinancing a Loan in the UK: How it Works

To answer your primary question: Yes, it is absolutely standard practice in the United Kingdom for one bank to pay off your loan at another bank.

This process is commonly called refinancing or a debt consolidation loan. Here is how it works:

1. Application: You apply for a new loan with "Bank B" (e.g., Tesco, M&S, etc.). During the application, you state that the purpose of the loan is "debt consolidation" or to "refinance an existing loan."

2. Settlement Figure: If your application is approved, you will need to get a "final settlement figure" from your current lender, "Bank A" (HSBC in your case). You already have this figure: $18,215.41. This is the exact amount required to close your loan account, including any early repayment charges or interest due.

3. The Transfer: Bank B will then typically do one of two things:

   • Direct Payment (Most Common): They will send the settlement amount directly to HSBC to pay off the loan on your behalf.

   • Payment to You: Less commonly for loan consolidation, they might deposit the full loan amount into your personal current account, and you are then responsible for immediately transferring the settlement figure to HSBC yourself.

4. New Loan: Once the old loan with HSBC is paid off and closed, you are left with just the new loan with Bank B, at the new, lower interest rate and with new monthly payments.

So, your initial understanding that you should be able to "move your current loan to a different bank under better conditions" is entirely correct. 

If the wording of the question during the loan asks "do you have any knowledge of any change of circumstances that will affect your income in the future" then stating you don't, when you are aware that you might lose your current job, is considered loan application fraud. This is simply a factual statement.

Sasek

Nasqueron said:

Sasek said:

Why do a lot of the answers seem to have a bit of a hostile undertone? I never said I was told that I would loose my job. I said something to the effect of I may not have it in the future (If I expressed it incorrectly here, I apologise). I don't currently have any information about the company planning to make me redundant, nor do I have any plans to quit so if I fill out the application for a loan, I would NOT be lying or misrepresenting anything. However, external conditions may change - as an example, if my parents need me to care for them in the future, I may decide to quit my job and do that. Again, I do not have any immediate plans to do that but anything can happen and I need to cover all my basis. Even if the worst were to happen, I still plan to make my loan payments and to pay off the loan eventually. So - there is and never will be any fraud here. 

My question in the forum was How to refinance my HSBC Loan at a lower rate? If the answer is: NOT POSSIBLE, then fair enough! I had a certain idea of how financial things might work (in particular that it would be possible to move my current loan to a different bank under better conditions = interest rate) but if it turns out that's not how things work, then OK. I guess things in the United Kingdom work differently than in other developed countries (where it is possible for one bank to pay off your loan balance directly at another bank) but again - fair enough!

Here is what AI says: 

Refinancing a Loan in the UK: How it Works

To answer your primary question: Yes, it is absolutely standard practice in the United Kingdom for one bank to pay off your loan at another bank.

This process is commonly called refinancing or a debt consolidation loan. Here is how it works:

1. Application: You apply for a new loan with "Bank B" (e.g., Tesco, M&S, etc.). During the application, you state that the purpose of the loan is "debt consolidation" or to "refinance an existing loan."

2. Settlement Figure: If your application is approved, you will need to get a "final settlement figure" from your current lender, "Bank A" (HSBC in your case). You already have this figure: $18,215.41. This is the exact amount required to close your loan account, including any early repayment charges or interest due.

3. The Transfer: Bank B will then typically do one of two things:

   • Direct Payment (Most Common): They will send the settlement amount directly to HSBC to pay off the loan on your behalf.

   • Payment to You: Less commonly for loan consolidation, they might deposit the full loan amount into your personal current account, and you are then responsible for immediately transferring the settlement figure to HSBC yourself.

4. New Loan: Once the old loan with HSBC is paid off and closed, you are left with just the new loan with Bank B, at the new, lower interest rate and with new monthly payments.

So, your initial understanding that you should be able to "move your current loan to a different bank under better conditions" is entirely correct. 

If the wording of the question during the loan asks "do you have any knowledge of any change of circumstances that will affect your income in the future" then stating you don't, when you are aware that you might lose your current job, is considered loan application fraud. This is simply a factual statement.

Again - I currently do not have any knowledge of any change of cicumstances! I was just trying to think of all possible scenarios to cover myself for any instances of what may possibly happen! I thought that would be the responsible thing, no?