How definite are loans offered by bank?

[Ilovealexa]

A lovely man from the Halifax called me a few months ago with some loan info. I said we were looking to borrow in the future but not quite yet as our extension hadn’t been granted PP yet so could he call me back.

He called me back yesterday and said we should manage to get £30k possibly even more looking at my profile etc.

Just wondering how definite these are and what could still go wrong when trying to get this? Is it likely to be turned down after actually applying?

Any time I do a loan comparison on my credit profile website thing I basically get told none but maybe because it’s my bank they’re more clued up?

(Definitely was the bank btw. Nothing dodgy)

Thanks

He will be looking at a thing called internal credit scoring. Going on the info of how you run your accounts, income, outgoings, previous borrowing etc. They do not do credit checks externally unless you are read a script confirming you allow this. When you do an application they will perform an external check, this will bring up any credit elsewhere and any failed, missed payments and anything potentially negative. So their assessment is fairly solid, but there is always the possibility it would be declined, but you would probably have a good idea if it would. Hope this helps x

Excellent thanks so much for that! Wasn’t expecting a reply at this time of the morning haha.

No missed payments as far as I know but I do have a couple of accounts sitting in overdraft that I don’t really use so hoping that wouldn’t affect things.

Don’t need loan till at least spring so will try and tidy things up as much as possible in the meantime.

Thanks again :)

No bother. If you can pay the overdrafts back before then it would be better for you, as the bank can see you using credit and paying it back responsibly. Actually having no credit is worse as they cannot see a history of you using credit. Best plan would be to pay it back in chunks rather than one go as this shows that you can stick to regular payments, if that makes sense. Try not to apply for anything that credit checks you if you can. Insurances by direct debit, applications for any lending, as they don't specify what the application is when the bank check your report, they just see an application for credit, if you take lending they can see it but an application could be you applying for a £30k loan somewhere else, which would be seen as a risk. X

They’re only 200 and 250 so that should be doable. I’ve got my mortgage with the bank so hopefully they can see I’m managing that well etc. Thanks again! Great info.

Check what type of loan the Halifax are offering. The amount suggests that it is a secured loan, as unsecured loans are usually capped at £25k.

That might be fine but you obviously need to be aware that it’s secured on your property and might cause difficulties if you want to remortgage etc.

That’s another thing to consider. Depending on what mortgage and how much equity you have, it might be cheaper to remortgage to release the £30k. You can always overpay to pay it off in a shorter term to save on interest.

But yes, your own bank often looks at you more sympathetically than banks ingeneral, because they have seen your accounts operate day to day and they get your salary every month.

Definitely not enough equity unfortunately.

He just called it a personal loan so should find out which it is. My dad is on my mortgage with me and I don’t think he’d want to be involved in an application 😩

I see on the Halifax website that they do personal loans up to £50k if you're a current account customer, so it's probably one of those. Interest rates look OK too, but check that you get a good interest rate, not one much higher.

I also got a personal loan to pay towards an extension as we had saved, but not quite enough and I initially applied to Sainsburys who were advertising a good rate, but when they came back, it was over twice as high, so too expensive I thought, so I applied to our bank, Santander who offered the advertised best rate, so much better.

But if you're a Halifax custeomer with a well run current account and meet the affordability criteria, they should give you the best rate, because if you don't qualify, you have to ask, who actually would?

He mentioned 8% but if we could take it over 6 years the % would go down but I can’t remember what to!

Also said things could change when it updates and might go down again :)

Did you remortgage when extension complete or just keep paying the loan?

Thanks for your help!

No to remortgage. The loan interest rate was 3.9%. I didn't realise it at the time, but I could had saved a bit of interest by paying it off quicker, but it was only about £600 on £10k, so not the end of the world.

We saved most of the money to pay for the extension because we were fortunate to take out a 0.4% above base rate tracker mortgage in 2006, so our mortgage interest rate is virtually nothing, and the whole monthly payment is less than £400 anyway so I'm in no rush to pay that off and it would currently be stupid to remortgage, not that we need to.

We do currently have a few thousand on 0% credit cards, that's sort of a hang over from paying for the extension and subsequent garden work (the driveway etc, which wasn't great to start with was completely destroyed, so we've just had it blocked paved for £££s).

I'll probably roll that over for as long as I can while the good offers continue - Santander are currently doing 27 months at 0% fee free for example so I might go for that.

It's just a minor way of getting one over on the banks as I also have a Santander current account that pays 1.5% interest on up to £20k, so if it all comes off, they'll be lending me money at 0% to put in their current account that pays 1.5%. I make a few hundred quid a year out of little schemes like that, just because I can.

Haha that’s brilliant!!

I’m not organised enough for that I don’t think.

Our mortgage is currently only £270 but we pay £500 so really unsure whether to remortgage or not!

Also only 16 years left of 17 year mortgage (not taking into account overpayments). Will hopefully get loan through bank but go back to broker for advice on what to do once we’ve done the extension and it’s time to remortgage anyway as rate will end in September coming.