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Hi Folks


Looking for some advice.


I am looking to get a loan of £25000 and pay back over 5 years for home improvements.
The best APR I have been quoted is 12% which seems very high (Approx £7000 extra)
My credit score with experia is 961 which is just in the excellent category.
I do have a little out standing debt but my affordability is very good.
The debt I have is £4500 on a loan and £8000 on credit cards, no mortgage as I have paid this off in 2016.
I also have savings of £12000 (but need £30000 in total so will be using £5000 of this)


why would the interest rate be so high? every thing on credit file looks good. should I pay off some existing debt with savings? what would be best to pay off loan or credit cards?


Should I think about a secured loan? How do these work?


Any help would be great


Thanks

Comments

  • Arleen
    Arleen Posts: 1,164 Forumite
    1,000 Posts Combo Breaker
    There are no easy fixes here, they see you as 12% risk so that is what they've offered you. Can be your job, can be your income, can be anything else, no one can tell.

    A secured loan is a very bad idea, as you are essentially putting the house on the line and if anything goes bad, they can go after it. A better option is to just save hard and do the works when you can.
  • BoGoF
    BoGoF Posts: 7,098 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Your 'score' of 961 means nothing.

    You say you have little debt, then say it is £12,500. What is your income? If you have no mortgage for the last year why do you even have debt - is the credit card debt 0%?

    There is little point having savings if the interest earned is less than you are paying on your credit.
  • Income before tax is 60k (this includes shift allowances and overtime payments)


    Yes the Credit Cards are 0% so didn't see the point in paying them off.


    Your point about having savings and debt is a good one, I never really thought about too much before until reading some of the tips on this site


    Thanks
  • enthusiasticsaver
    enthusiasticsaver Posts: 16,052 Ambassador
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    I think the fact you have £12500 in debt is probably the reason the rate is not that good. Rightly or wrongly anyone who has £8k on credit cards (even if on 0%) may be seen as a bad risk. Do you have to do the improvements all in one go? I would break it into sections and do it a project at a time and also address the debt outstanding.
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  • OP you should take out a mortgage over 5 years.
    With 100% equity you should get a better rate than the best personal loan rate.
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