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Aargh! New credit applied for between DIP and full application...

4 replies

BendyBeard · 17/02/2019 09:00

We've got a DIP in place after a couple of attempts, We have a lot of credit card debt so affordability has been an issue. Had a chat with broker on Friday, it's all finally looking positive and he was going to submit the full application.

Just sorting out reservation fees and bits of paperwork to send over, and husband has just cheerfully told me that he's applied for a debt consolidation loan so that all his payments are in one place and this will be less than his credit card outgoings so 'this should help with affordability!' He hadn't thought about the fact that this would just come up as another loan application and would look really irresponsible. He is mortified - he just thought it was a positive step and hadn't thought about the credit search etc...

I'll call our broker first thing - but does anyone think there's any chance of us getting this sorted once it's all explained?

He applied for the loan last Thursday and is just waiting to hear if it's been approved or not. If it has, he'll do as he said and use it to pay off all other debts, which obviously we'll be able to prove. The new payment would be less than his minimum credit card payments. If not, our situation will be exactly the same as it was when we got the DIP.

It's Leeds, if that is helpful.

Any views welcome ... I'm worrying anyway!

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Perty01234 · 17/02/2019 09:03

Logically it will just be a credit check for the loan, speak to the broker and he might advise pulling out even if it’s authorisied to be honest?
How much is a lot of credit card debt?

BendyBeard · 17/02/2019 09:19

17k between us - mostly in DH’s name. We’d moved everything to interest free credit cards.
Pulling out of the loan you mean, or the mortgage application?
Thanks for the reply!

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BarbaraofSevillle · 18/02/2019 08:28

How much extra interest is moving interest free credit cards to a (presumably) interest charging loan going to cost you? If the loan payments are cheaper, the loan must be for a longer period than the credit cards would take to pay off, if you kept the payment the same as it is now.

Are you currently really struggling to afford the monthly credit card payments? Have you cut back all you can on spending to get out of debt? Think carefully and maybe reassess before committing to the loan.

If you take the loan, whatever you do, get rid of all except one credit card each and only use that if you can pay it off in full every month without fail, otherwise you could be at the top of the slippery slope to financial ruin and have unmanageble credit card debt and a loan to pay off.

BendyBeard · 18/02/2019 22:24

Thanks for the reply Barbara. We're on top of the finances and not struggling to make repayments. The loan was 2.8% and so wouldn't have added an extortionate amount of interest by any means. It would only have been about £20 less a month than DH currently pays on his credit cards.

It was just that mortgage lenders seem to apply a 3% of the balance assumption when it comes to credit card payment, so in their eyes this loan would have made a big difference to our affordability.

It's the impact of the credit search on our mortgage application I was worried/asking about … but the application went in last Friday, so I guess we'll know soon enough!

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