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Credit rating/affordability for a loan

(14 Posts)
katymac Wed 01-Mar-17 21:01:42

We just paid off our mortgage & we want to buy a camper van

How do banks work out affordability for a loan & will our credit rating be worse as we no longer pay a mortgage (someone said this & I thought it was daft but that I'd better check)


katymac Wed 01-Mar-17 21:24:39

Is the MSE Credit club worth doing or will it just make things more difficult

Notreallyhappy Wed 01-Mar-17 22:13:41

katymac Wed 01-Mar-17 22:35:04

Thanks - that makes sense

Still working on affordability stuff

19lottie82 Thu 02-Mar-17 05:09:39

As a rule of thumb affordability for a loan is that a bank will lend you 50% of your annual income minus any existing debts.

katymac Thu 02-Mar-17 06:45:20

Thanks Lottie, is that 'half' for repayments or ofr the whole amount

eg i was paying 985 (mort) plus car 165 plus cc 187 which is over half my monthly income?

UrethaFranklin Thu 02-Mar-17 09:03:47

Its annual income. So if you earn 50K, the max loan you can usually get is c25K.

VacantExpression Thu 02-Mar-17 10:29:35

Not having any credit will have a negative effect on your credit score. having a credit card or store card that is used even if only for petrol or something and paid off IN FULL every month will help your credit score (as will lots of other factors, mobile phone contract, not moving house every six months, loads of things)

katymac Thu 02-Mar-17 11:38:28

I think my credit score is quite good (lived here 15 yrs, mobile contract, car loan, CCx4)

I'm just panicking somewhere like Tesco would possibly do a lower rate than the campervan company but I worry about an unsecured loan from them vs a loan against the van at the dealer

19lottie82 Sat 04-Mar-17 07:44:37

50% Annual income minus existing debt. Say your income was £40k and you already had £6k of debt then you could borrow £14k.

However as already stated this is a rule of thumb and should not be relied on. You may be offered more you may be offered less depending on other factors

19lottie82 Sat 04-Mar-17 07:45:57

PS 4 credit cards is quite a lot, in terms of the amount of credit you have access to. It might be an idea to cut this down to 1 or 2. That's what I didn't before applying for my last mortgage .

katymac Sat 04-Mar-17 11:23:40

I suppose technically I could put it all on the cc.

I am hoping the loan secured on the motorhome will be ok

hilbil21 Sat 04-Mar-17 11:35:19

I would recommend Ratesetter for a loan. I have recently got a loan with them as has a friend. Their rates are competitive and the loan seemed easier to get than other ones I have had in the past.

katymac Sat 04-Mar-17 21:58:39

Thanks - I'll have a look

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