Clear credit union loan whilst seeking 40,000 loan from AIB?

[ando]

Hi guys,

I’m in a bit of bother at the moment and need some advice.

I am currently negotiating with AIB for a loan of 40,000 to pay back negative equity of a mortgage on a house gone bad. The mortgage is with Aib. I have a credit union loan of 7000 currently, however I have shares of 7000 also, so if I wanted to, I could neutralise this loan tomorrow.

I want to get rid of my credit union loan, however my question is, is it better to keep the credit union loan now while I am negotiating with AIB for a loan rate. IE, they will be going through my financial circumstances to see how much I can pay back. My credit union loan is @ 350 per month. I want to keep my repayments for the 40,000 as low as possible. I work it to be 277 per month for 15 years which is ok with me. So is it better to keep my credit union loan? If I clear my credit union loan, is there a chance the bank could say I can afford larger repayments and want me to up the repayments?

Thanks

 

[Macstuff]

Hi Ando,

Have you told the bank about your credit union loan? They will probably see it - as you probably have made loan payments from a current account?
I would declare it, but make it clear to the bank that you are going to be clearing it when you get your new loan. If you plan to use some of the proceeds of the new loan to clear it the bank will probably insist that they either send part of the loan proceeds directly to the credit union or they will give you a cheque / bank draft made payable to the credit union so that you have no choice but to pay it off.