Denied credit union loan altought approved for same purpose previously

lifeandtimes

Hi,

I currently have a loan with my credit union and added more shares to my account and applied for a top up.

The original loan was for home improvements on a house I share with my partner who has a mortgage on it. The top up was for the same reason but I was declined by the credit commitee as is be putting money into a house which doesn't have my name on the mortgage, all this information was there for my first loan and it was approved. I advised to the loan officer and she said "just not this time"

I'm looking to appeal but have no idea where to start, any advice?

I have kept up repayments on my last loan perfectly and have a fair amount of shares but none of this was used as an excuse, just that I didn't own the property

Thanks

Atlantic Dawn

Have you cleared the first loan, if not what % is left to pay on it?

phormium

It's neither here nor there what you were approved for before, that was then this is now. CU lending policy could well have changed in the meantime or they may have looked at the original loan and thought in hindsight it was a bad reason to do a loan for in the first place.

They are of course concerned that you are ploughing money into an asset you do not own, should anything happen in the relationship then why would you keep paying? A lender always looks to the worst case scenario and in your case there is no incentive to keep paying should things go wrong. It would be different if you had any financial interest or claim regarding what the money is being spent on.

I can see why they would be limiting their exposure on something like this. I don't know what your grounds for appeal would be other than maybe you were a good payer on the existing loan and the amount being looked for is small? Appealing based on having been given it the last time I don't think would hold any sway, policies change regularly and are even tighter now with Central Bank and Credit Unions.

lifeandtimes

phormium wrote: »

They are of course concerned that you are ploughing money into an asset you do not own, should anything happen in the relationship then why would you keep paying? A lender always looks to the worst case scenario and in your case there is no incentive to keep paying should things go wrong. It would be different if you had any financial interest or claim regarding what the money is being spent on.

Hi and thanks for your reply.

Unfortunately that reasoning could apply to anything, if I got a loan for a car and it broke down then i couls just stop paying if I felt like it, I'm also living in this house over 8 years and married to my partner which means in the event of splitting I could in theory make a claim to the house. I rang back to enquire further and I was advised that my precious loan may have been an oversight however since my precious loan I am ahead of payments while still adding to shares, it's just a bit of a kick in the teeth, the work is needed to be done and this is my home also and I've been an decent member paying my loan back.

Anyway thanks for your input i appreciate it

phormium

You didn't say in your first post you were married.

While yes it could in theory apply to any loan however based on your initial info it was probably a higher risk than other purpose loans. Your car analogy doesn't really happen as if a car attached to a car loan was written off then chances are the person requires another one and another car loan to get it so first loan remaining balance is rolled up into new loan. It would be impossible get the new loan with an outstanding unpaid one.

Can you apply for the loan in joint names with your spouse, would that make the CU happier? That would allow them do an ICB on your spouse which will let them know if payments on mortgage are up to date or any other issues.

Write in a letter of appeal to the Credit Committee, offering joint names if that is possible and see if that makes any difference.

lifeandtimes

phormium wrote: »

You didn't say in your first post you were married.

While yes it could in theory apply to any loan however based on your initial info it was probably a higher risk than other purpose loans. Your car analogy doesn't really happen as if a car attached to a car loan was written off then chances are the person requires another one and another car loan to get it so first loan remaining balance is rolled up into new loan. It would be impossible get the new loan with an outstanding unpaid one.

Can you apply for the loan in joint names with your spouse, would that make the CU happier? That would allow them do an ICB on your spouse which will let them know if payments on mortgage are up to date or any other issues.

Write in a letter of appeal to the Credit Committee, offering joint names if that is possible and see if that makes any difference.

That's a great idea, thanks I will do that

ash23

OP I was approved for a CU loan at a home improvement rate when I moved into my rental house. It was unfurnished and long term so I needed to get furniture etc.
I applied for another loan for doing up the garden and was told I could have the amount as a personal loan (higher interest rate) but not as a home improvement loan as it's a structural change to a house I don't own.
I can only assume there may be similar rules in other CUs and as the first loan was being used for contents it was ok, the second was for buildings so not ok.
Perhaps it might be better applying for a personal loan at the higher interest rate.

Trish56

Why don't you get the house transferred into joint names and remortgage to include the amount required for home improvements. Majority of lenders are now offering either 2% of the mortgage or 2k to switch which would more than cover the legal fees and the rate you pay depending on the loan to value would be approx. 3.50%.