I can see why they refused you.Amongst the options I considered when deciding how best to pay off the remainder of our mortgage with UB, I enquired about getting a personal loan from my local credit union. I know I would have no problem getting a loan of this moderate size, I have a good credit record, have borrowed from them numerous times and cleared all of the loans etc.
I made an application for a personal loan. As part of the explanation as to how I would be able to pay it back, I volunteered (note!) the information that I was going to use it to clear a mortgage, as the loan repayments would have been much less than the monthly mortgage payments. I thought, win-win situation here, the credit unions are desperate to loan, I could clear the mortgage and actually have more disposable income each month.
The loan was refused and I was told that credit unions are not permitted to loan for that purpose under Central Bank regulations.
Note that I pointed out that I was applying for a personal loan. I could have said it was for a holiday, or to buy a horse, or 42 washing machines, in fact, I needn't have said what it was going to be used for at all .... it was a personal loan!
Has anyone ever heard of any such Central Bank regulations?
What on earth makes you suggest that?or are you dealing in cash.?
Is that one of its principles? Being the most expensive lender on the market?Whatever CU did this, I applaud them in sticking by the principles of it cause
...
Why would you take out a loan from the CU anyway....apparently the most expensive lender on the market...
Huh?" its better to have 1000 €500 loans out that one 500,000 loan.
I did, but everything was in relation to mortgage and property lending. I didn't apply for a mortgage, or borrowing for a deposit on a house (which, let's be honest, pretty much everyone I know did, back in the day!)Why don't you ask your CU to refer you to the relevant rules/legislation?
No it doesn't, but it was one avenue I was exploring. The motive was to get away from UB as quickly as possible before the mortgage gets transferred to PTSB. I left PTSB (post financial crash) because at the time they quoted me a 9% variable rate. One advantage of a CU loan is that you can pay it off as quickly as you like, and I've already exhausted the 10%/year I can pay off with UB's fixed rate.surely using a CU loan to clear a mortgage doesn't make financial sense
I would have thought that securing the family home fits into that ethos. I have saved a bit and was now asking to borrow a bit.The CU movement was set up in the 50s in Ireland to do nothing other than build a fund to allow families to save a bit and borrow a bit when needed
I'm also a big supporter of credit unions, and use them anytime I need to borrow small or medium amounts (in this case, less than the cost of a new car). I was just taken aback that this would be such an issue. But fair point, if it's the principle of the thing then fair enough -- but why say the Central Bank was the problem? I'm in no way being critical of the CU, I'm just curious to know if anyone has ever come across such a Central Bank regulation.Whatever CU did this, I applaud them in sticking by the principles of it
While they might not lend to buy a horse, I'm pretty sure there are people who've taken out CU loans to put it on a horse. I also don't see anything there to stop someone taking out a car loan, and buying a horse instead.And they don't give loans for horses either.
This particular CU regularly accomodates "top-ups" to existing loans. One loan type advertised is specifically intended to consolidate and pay off other debt like credit cards. In this case, they probably didn't want to agree to what would have effectively been an interest rate cut, from their perspective.they said they wouldnt lend in order to clear off another loan
Whatever CU did this, I applaud them because the money will help multiple of those who need it.
No it doesn't, but it was one avenue I was exploring. The motive was to get away from UB as quickly as possible before the mortgage gets transferred to PTSB. I left PTSB (post financial crash) because at the time they quoted me a 9% variable rate. One advantage of a CU loan is that you can pay it off as quickly as you like, and I've already exhausted the 10%/year I can pay off with UB's fixed rate.
That's not my post (although I did contribute on the thread, as I am in a similar situation). What I want to do is clear the mortgage, and I will do this shortly. Long story short, in the meantime, rocketing inflation about to eat into other savings makes using those savings to clear this mortgage a no-brainer. My CU enquiry was just part of the process of exploring options.Looking at your other post
This is where my principles kick in though .... based on my past experience with them, I never want to darken their door again. I'll happily pay more elsewhere if it means having nothing to do with them.I appreciate you may not want to transfer to PTSB
I did not know that -- thanks for the tip. I'll be paying a break fee but the latest statement I got puts this at only €19 (!), another surprise.Just to point out you can overpay by more than 10% a year.
On this point could there be an issue that the cu could be charged with mis-selling a financial product. I don't know much about the central banks code of conduct but I image there's something in there about ensuring the product is a right fit. Refinancing a relatively low cost mortgage with an higher cost unsecured credit would be a hard one for them to get past the regulators.Back on topic though, I don't think there is any Central Bank regulation that forbids a CU lending to clear a mortgage. I would have thought it would make a lot of sense for a lot of CU members, and would be good for the CU sitting on piles of cash and its members collectively.
You could be on to something there alright!Refinancing a relatively low cost mortgage with an higher cost unsecured credit would be a hard one for them to get past the regulators.
I do admit in hindsight it was not the brightest idea I've ever had. Financial "tough love" perhaps!Or maybe it's not in the regulation and they are being a good cu and are looking after the interest of their members, well in this case one member.
I had a similar experience with my own credit union.we needed 25k towards the cost of buying a property but once they asked the purpose of the loan which we told them,the loan was refused.
It was going too be the sole borrowing too purchase the property.Interesting, was the €25k loan going to be the sole borrowings for the cost of the property or was there a mortgage from another institution involved?
In fairness, this is actually covered in the regulations, however there was an amendment in 2020 whereby they're no longer required to hold first charge on the property. Nevertheless, yours was a clear case of borrowing to buy property, and as credit unions can now offer mortgages, it is also good business sense for them to refuse other loans for the purpose of buying property. I only applied for a personal loan however. If I go back next week and say I just want to buy a second-hand car, or pay for a wedding, I know I'd get 25K no problem.we needed 25k towards the cost of buying a property but once they asked the purpose of the loan which we told them,the loan was refused.
Isn't this beyond insane?if they refuse you,it will remain on your credit record that your loan was refused.
You are very likely paying for the privilege of supporting the CU compared to borrowing from other sources. Maybe you're ok with that, but many would not be.I'm also a big supporter of credit unions, and use them anytime I need to borrow small or medium amounts (in this case, less than the cost of a new car).
Almost certainly that is incorrect and the CU loan used to clear the mortgage would be a much higher cost loan (both the nominal loan rate charged and the effective higher rate once money required to be held on deposit or in shares while borrowing is factored in) than the original mortgage loan secured on the property.Credit Union member with pristine credit history in permanent pensionable employment looking to borrow money to pay off the mortgage on the family home which would reduce monthly outgoings by 30%
Op don’t forget if they refuse you,it will remain on your credit record that your loan was refused.
So you want to borrow at a much higher rate to have the flexibility to pay off a loan earlier?No it doesn't, but it was one avenue I was exploring. The motive was to get away from UB as quickly as possible before the mortgage gets transferred to PTSB. I left PTSB (post financial crash) because at the time they quoted me a 9% variable rate. One advantage of a CU loan is that you can pay it off as quickly as you like, and I've already exhausted the 10%/year I can pay off with UB's fixed rate.
The fact that a credit check was done will remain on file for five years but nothing to do with what the institution decided on the basis of that check.This isn't true. Don't know where you got that from.
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