Reply to: Bad credit loans for contractors?

[RugbyPete]

Lend out £1M and you get £100k a year back...hmm

[ASB]

A slightly different view on things - take a look at www.zopa.com. Essentially a place where anyone can loan and anyone can borrow without the bank as a middleman.

They have various catgeories of "risk" which is effected by your previous financial history. Interest rate of a loan is determined by your risk - but assuming you fit within the allowable risk profile there's a good chance you'll get a loan cheaper than from the bank.

ZOPA gave me a free 30 quid. So I lent that in september @ 10.5%. So far I've had the first payment. It seems I've made a total of 3p in interest and paid 2p in fees.

Still I'm 1p up on the deal and should end up a bout 2 quid up on the deal when it completes.

Still the 30 quid was free and there is now some chap with a car. Seems to me it's not bad for borrowers, but not good for lenders.

[boredsenseless]

it is also the case that bad credit lenders have less repos as a percentage of their loan book than god credit lenders. odd i thought, but true.

Very true cos bad lenders then charge exortionate fees and penalties therefore making more money. Responsible lenders call it time when it becomes obvious you are shafted.

[mad123]

it is also the case that bad credit lenders have less repos as a percentage of their loan book than god credit lenders. odd i thought, but true.

[Paddy]

Just my 2 cents worth........................

Never take a secured loan against your home...especially if you have poor credit ratings as it has been well documented on various news sites and in articles, that companies that provide secured loans to people whose records are deemed 'sub prime', WILL snatch your home away from you at the slightest whiff of a problem in any monthly payment.

You say that you can afford the payments, but what if your contract ends abruptly? or you break a leg?

I agree with that. In fact it is part of profitable side of lending, repossessions. Banks, BSs and loan companies make loads-of-money on repossessions

[premiere]

Just my 2 cents worth........................

Never take a secured loan against your home...especially if you have poor credit ratings as it has been well documented on various news sites and in articles, that companies that provide secured loans to people whose records are deemed 'sub prime', WILL snatch your home away from you at the slightest whiff of a problem in any monthly payment.

You say that you can afford the payments, but what if your contract ends abruptly? or you break a leg?

[mad123]

not necessarily. some secures lenders will go up to 125% of property value. could try www.skymortgages.co.uk. btw, blatant spam!!

[RugbyPete]

I guess you'll find the reason was that you have no equity in the house, your other half does but you don't.

Last time I checked you couldn't take out a secured loan against a property you didn't own, otherwise I'm going to borrow 2 million against the houses of parliament and just tell the bank my fiance owns it and is okay with it.

Also even if you did own the house you'd struggle. With 10K difference between mortgage outstanding and house value (in the current market) you'd struggle to find a mortgage lender willing to let another company take a second charge against the property. If you did the other company would be worried anyway since the 1st charge (i.e. mortgage co get first dibs on any proceeds) so if the value went down 10K and you were forced to sell the mortgage company would be okay but the second charge would be out of pocket.

Yeah, I see what you're saying here, but surely as a JOINT application, if the queen agreed to be on the application you could secure against the houses of parliament being joint risk.

So, options.... mortgage company, unemployed loan in the missus name only, high APR unsecure bad credit loan for me.

[Paddy]

I recently got turned down at the 11th hour for a secured loan because I work as a contractor through an agency, despite having a good income, a rolling 6 month contract (renewed last month) and secured on the house (over £12k equity). As you can imagine I was highly annoyed being pre-approved then after 7 weeks of passing papers back and forth they stop on the day of issuing a cheque.

I have bad credit also, which adds to the pot, but is obtaining £5000 really unrealistic??

the risk is with me because its secured on the house, I can afford to pay the loan with a good rolling contract, and I have double the loans equity in the house so I really dont understand why Im so uncreditworthy via this route.

My fiance' doesn't have an income, shes a homemaker.

Does anyone have any ideas or experience themselves that could help? The loan will be mainly for improving the value of my home through improvements.

I was turned down by a broker LoanMakers.co.uk

£12k is nothing, they won’t count that as equity. In the event that you default on your mortgage and after repossession your house will go for auction. If it is valued at £200,000 and you owe £180,000 the likelihood is that the house will go for £160,000 at maximum. You will then be sued for the remainder.

The lender is seeing you as a high risk. In fact it would be more secure in lending to someone in rented accommodation as it is more secure. You need are more equity than £12K to be considered

[martinb]

A slightly different view on things - take a look at www.zopa.com. Essentially a place where anyone can loan and anyone can borrow without the bank as a middleman.

They have various catgeories of "risk" which is effected by your previous financial history. Interest rate of a loan is determined by your risk - but assuming you fit within the allowable risk profile there's a good chance you'll get a loan cheaper than from the bank.

[boredsenseless]

I guess you'll find the reason was that you have no equity in the house, your other half does but you don't.

Last time I checked you couldn't take out a secured loan against a property you didn't own, otherwise I'm going to borrow 2 million against the houses of parliament and just tell the bank my fiance owns it and is okay with it.

Also even if you did own the house you'd struggle. With 10K difference between mortgage outstanding and house value (in the current market) you'd struggle to find a mortgage lender willing to let another company take a second charge against the property. If you did the other company would be worried anyway since the 1st charge (i.e. mortgage co get first dibs on any proceeds) so if the value went down 10K and you were forced to sell the mortgage company would be okay but the second charge would be out of pocket.

[RugbyPete]

do you not have any credit cards that you can max out?

tim

Possible, but not ideal. I only have very high APR's so dont use them other than to look good in future when i get a competitive rate.

And budetting is fine, but covering all bills, the missus and a child (one on the way) theres little left for my additional purchases. It could be done, long term, but Ideally wanted it all done in one chunk so i'd not have to do it again for a long while.

[Spacecadet]

also its only £5k... as a contractor, you should be sticking a fair amount away on a monthly basis, try and get a few contiguous contracts so your savings aren't being eaten into in-between gigs and you'll get the £5k fast enough

[tim123]

do you not have any credit cards that you can max out?

tim

[RugbyPete]

have you tried your mortgage provider?

No I've not. The wifes name is on the deeds despite me being the mortgage payer. so out last application was a joint one, my income her house security.

I was thinking of secured personal loans for the unemployed. Technically I will be paying it, but via my fiance - any thoughts?