Credit union loan realistic ?

RAINE43

Hi there,

We are planning on applying for a credit union loan in about 3 months time so we can get some renovation work done on our house. We have 12,500 saved in the credit union & 7,000 in the bank. We have been a member for 8 years & have taken 2 previous loans. One of 2,000 within shares & one of 4,000 with 2,000 in shares. Both were paid back on time. My husband is working only as I am at home with the kids. He is self employed & makes about 45,000 - 46,000 a year. We also get 280 child benefit a month. We are hoping to apply for the online complete loan which is 6.17%. We are a looking at 40,000 to pay back over 10 years which would be a repayment of 106 a week which is more than manageable for us. We aren't big spenders, have no debts, our mortgage is 1245 a month with 15 yeas left on it. We are hoping we can get this loan, it would mean we can finally get much needed work done. What do you think our chances are.

Also I was in chatting with one of the members of staff last week. I asked her if we applied for the 40,000 & we didn't get it could we then apply for a lower amount. She told me it doesn't work like that. She also told me they won't hold our shares against the loan if I move them from our shares account into a deposit account. She said the loan is based on the ability to pay.

JCN12

460 loan per month + 1,245 mortgage = 1, 705

Seems like a lot of debt to service every month. Almost half of your net income.

JVince

so you have 20k earning about 0.5% interest and want to borrow 40k at over 6%.

That's just crazy.

I don't think "shares" in a credit union makes any big difference.

Re-do your renovation figures. See if any of it attracts grants. Maybe talk to the mortgage provider about a "top up" loan of about 30k leaving about 10k rainy day fund. It will be a separate loan that will run in tandem with your mortgage and probably at mortgage rates.

But borrowing 40k and having 20k on deposit makes no sense

RAINE43

https://www.boards.ie/discussion/comment/121526757#Comment_121526757

We can actually withdraw our shares & use them along with the €40,000 which means we’ll have €60,000 in total to have the much needed with done. The type of loan we’d be applying for doesn’t hold your shares once you move them from the shares account to a deposit account. We can then withdraw them.

appledrop

I'm sorry now but I worked in a credit union for years and unless the credit union have changed significantly none of what you stated above us true.

Under no circumstances would we allow a member to withdraw their shares after they got a loan. That's just pie in the sky stuff especially on a 40k loan which would be a large amount for a credit union to lend.

You were also given misinformation, if you are refused a loan you can reapply again for a lower amount. Doesn't mean you will get it but can try.

Which credit union is this?

RAINE43

its an online complete loan. I was told you only need to have €10 in your shares to apply. Obviously having savings helps with the chance of getting the loan. The loan is based on ability to make the repayments. O was told this several times by the staff there. They said to just move the savings from shares account to a deposit account or withdraw them before applying for the loan.

I’m afraid to say I don’t want to get the staff in trouble.

Indestructable

Some Credit Unions have changed their policy and don't tie up nearly as much shares. I've a 40k home loan with 1k shares tied up and about 5k free to do as I wish, no problem as I could easily afford the repayment.

That shouldn't be a barrier to the OP, their income likely will be.

RAINE43

https://www.boards.ie/discussion/comment/121527993#Comment_121527993

So based on income it’s an unrealistic amount to borrow. We are now thinking €25,000 - €30,000 might be more realistic?

Indestructable

https://www.boards.ie/discussion/comment/121528007#Comment_121528007

Honestly, I don't think anyone here can tell you for sure. The Credit Union is still your best bet as they look at each application and applicant on their own merits. A bank is a lot more impersonal. I also get the impression CUs are still sitting on massive cash piles and are eager to lend, at least for now.

The Self Employment is also a risk factor I'd imagine.

My advice would be to apply for what you need and see how it goes. The worst they can do is say no and it shouldn't effect applying again for a lower amount. You might even be able to set up a meeting with a Loan Officer who can advise further.

Don't over extend yourself either, make sure you are comfortable with repayments yourself.

RAINE43

Thanks. We have been saving for so long & have been disheartened with the quotes we are receiving from builders recently. It isn’t even a big job we want & the fear is borrowing too little & we run into a problem & need more money. We got a quote that we think will work for us but we still need a loan. Maybe we’ll have to try scale back again.

Jim2007

https://www.boards.ie/discussion/comment/121528064#Comment_121528064

Your biggest fear should be that you won’t be able to pay it back! I have supervised people in debt and worked on liquidations and I can tell you that it is not a place you want to find yourself in. Nobody likes to talk about the reality of it but the first thing that will go is your independence. A decision on cutting a Christmas bonus at work could determine if your family can even have a Christmas or a child go on a school trip and so on.

The other thing to keep in mind is that you only need the maximum capacity of a house for a short time, but a financial mistake in achieving could see you spend decades trying to get back to where you were. Many of the people who got burned in 2007 are now back to where they were, which in reality means they are behind where the should be.

Do the minimum extension you need and only borrow within your means, that is the smart move.

RAINE43

The extension is only 12 square meters with a small wc & we are knocking a wall through from the kitchen into dinning room. Getting a new kitchen fitted, tiled etc. We were quoted just over 30k for that which was the best quote we received. We will also need to get a new kitchen installed, a new boiler, lament floors for the dinning area & extension so realistically we will need another 20k for that so I’m thinking save 30 borrow 20k. Taft would workout out at €236 a month in repayments over 10 years which will be fine for us. I’m hoping in a couple of years when my youngest is in big school to get a part time job. At present I can’t do as she is only in preschool until 12 & we’ve no childminders. My eldest is 11 in a couple of years he’ll be more independent & maybe I can work something out. The house won’t wait until then it really needs a new kitchen area it’s very bad.

drunkmonkey

It seems expensive. Knocking a wall isn't much time or money unless you need to support it. Even if you need some steel it's still not mad money.

Laminate I hate the stuff it's glorified cardboard. Put in an engineerd or solid floor and be done with it for life. It's not a big area some supplier will have that much left from a previous job so you'll get a bargain.

Forget about the tiles...let the engineers/wood floor run the whole way through the area.

A new boiler is the old one fecked? Don't replace until it is. Maybe a good service of the existing one is enough.

The kitchen cabinets themselves with ovens, hobs, fridge etc, that's the biggie.

There's so many deals out there. Start with the appliances you want. You can have the coolest looking kitchen in the world but if you cheap out on the things that matter you might as well not bother.

Make a list after doing your research, I want that over as it dries the kids after soccer practice etc and go from there. You can put in the new appliances now without ripping apart everything.

I don't think you need to go into debt just prioritise what you want the most and go from there in your own time.

iniscealtra

Fitted kitchen are ridicously expensive. Get the appliances you need and buy or source (freecycle) some free Standing furniture. Otherwise just put on new doors on the presses. I definatly would not be getting into debt for kitchen cabinets.

JVince

https://www.boards.ie/discussion/comment/121527964#Comment_121527964

Yes, credit unions have changed significantly in the last few years. Many can now provide mortgages and business loans.

Some will still want 10%-20% of the loan value held in shares but many simply require you to just be a member.

RAINE43

https://www.boards.ie/discussion/comment/121528401#Comment_121528401

Thank you. We have to get a new boiler as it’s in the part of the kitchen, an old badly done extension that will be getting demolished. It’s a very old large boiler that I’m surprised is still running.

I’ll be more than happy with an ikea kitchen, they have a sage green one which I love!! Saving on the cost of kitchens elsewhere we can put that money into the appliances.

I think the builders that came out only wanted jobs that are 100k or more. We need to go with builder who is happier to do a smaller job

RAINE43

https://www.boards.ie/discussion/comment/121528622#Comment_121528622

Unfortunately our cabinets inside & out are in bits. It has to go. I have to clean them regularly as shavings come off inside the presses. IKEA will do me fine though. They don’t seem to be as expensive

RAINE43

https://www.boards.ie/discussion/comment/121528624#Comment_121528624

Yes I was told this particular loan they don’t require you to hold anything against the loan. We have decided to try our luck asking for 20k over 10 years. We have a great savings record & paid 2 previous loans back. We don’t have any other debts besides our mortgage of €1245 a month. We don’t overspend & our accounts look good. We actually use my husband’s tips to pay for our food shopping every week. Obviously this isn’t declared money but it keeps our back balance in good shape.

lbunnae

https://www.boards.ie/discussion/comment/121537199#Comment_121537199

20K seems like a much more reasonable amount of debt to out yourself into , good decision , fingers crossed you get it. I’d imagine you will , credit unions are sounder than banks and if you have a good history it should be grand.

RAINE43

https://www.boards.ie/discussion/comment/121528401#Comment_121528401

This thing is it is expensive out there at the moment. This was the best quote we were quoted. The builder was not pushy whatsoever & wanted to work we what we wanted. He priced everything up front & sent us a breakdown. Materials are sky high at the mo, he explained this to us but we could see what each item cost. The other builders just send an overall price so I can’t help but suspect they are adding on as for the same job we were quoted 80k. No messing … it makes no sense.