Options or stuck with Credit Union ?

Discussion in 'Credit Union issues' started by Patty C, Feb 15, 2017.

  1. Patty C

    Patty C Registered User

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    Last edited: Feb 15, 2017
    any advice appreciated: I borrowed €37000 from credit union last July at 11%to complete house project, I'm repaying €500 pm and can manage this right now how ever now that the dust has settled on the project literally, Im look at tightening finances and in all honestly I prob took too much on but that said I will repay €78000 inc interest over 15 years and be 74 when is repaid.
    I've been to my local bank where I'm a customer for 40 years and excellent credit rate I've told. I applied for a personal loan of €40000 to clear the CU completely, total relay of €55000 over 10 years but was turned down, this sort of a scenario did not appeal to them. I do jot have a mortgage, the option is to apply for a mortgage, the negatives here I see are
    Credit U in my area do not offer mortgages, and I discussed reviewing interest rate and no negotiation.

    Income is low €19000 approx
    I'm 55
    Legal cost of loan application.etc.
    I find it tight living from day to day, there is never anything left.
    I would appreciate any advice. Thanks
     
    Last edited: Feb 15, 2017
  2. cremeegg

    cremeegg Frequent Poster

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    1,900
    11% interest on a long term loan is very high. You should try asking them to lower the rate. Point out that now the project is complete and you have been paying since July there is little risk to them. Also tell them that you are thinking of refinancing the loan elsewhere at a lower rate. They don't know that the bank has refused.

    The APR is the best way to compare loans, double check what the APR is on the CU loan. Are there any penalties for early repayment. A mortgage over 10 years would cost about €400 per month or about €300 over 15 years.

    The only thing you can do is contact each bank and perhaps a broker and ask. If they say no ask why and try to improve your application based on their response. Keep asking until you get a yes. It should not be impossible.
     
  3. Monbretia

    Monbretia Frequent Poster

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    1,163
    Does the credit union have no option to change it to a secured loan secured against the house? Effectively similar to a mortgage and maybe they mean they don't do those type of secured loans but it should get a better rate.

    Do you have any other credit union around you could become a member of who might do them?

    Otherwise only option is a bank mortgage and you are a bit below the amount most do but you could always borrow that bit more and just pay back a lump sum as soon as it is drawn down if you can get approval. Yes you will have legal costs but should be cheaper in long run.
     
  4. jathclare

    jathclare Frequent Poster

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    Last edited: Feb 15, 2017
    Options as I see them are to reschedule or refinance. If refinance is not an option then the parameters to adjust are a.) Length of Loan, b.) Principle, c.) interest rate.

    For a.), If the loan is 15 years already, that is practically mortgage territory and I thought CUs could only lend a portion of their book up to a maximum of 10 years. Also age is a factor unfortunately.

    For b.) to change the principle involves a write down or a portion of the loan to be set aside interest free. You would have to be clearly in distress i.e. regularly missing payments for the CU to entertain that, as you mentioned you are repaying so not at that point in their eyes. Plus its not even one year since the loan was taken out.

    For c.) this would reduce the burden, some credit unions will lend 6% secured providing the loan amount is less than shares.

    Bear in mind that before the CU lent to you, the credit union would have assessed your circumstances and backed your application. They may be amenable to a temporary rescheduling of interest rate to protect their principle.
     
    Last edited: Feb 15, 2017
  5. RichInSpirit

    RichInSpirit Frequent Poster

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    599
    Maybe go talk to a good mortgage broker to see what you're options are.
    In my "life experience" banks won't lend to refinance credit union loans.
    54 is young in the modern world but old in the lending world.
    Your income is very small.

    On the plus side you probably have a very good credit rating at the moment.
    The completed property might be very valuable now with loads of equity in it which might make it possible to refinance.
    You could rent out a room tax free under the "rent a room scheme" to bring in extra income to help with the repayments.
    You could sell the property now or at some stage.
     
  6. Gerry Canning

    Gerry Canning Frequent Poster

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    2,514
    Patty C,
    If project was not for your home , can I suggest sell it and give yourself peace !

    If it is your home and you can afford the 500 , then keep it going.
    don,t think too much into the future , things change and if you can keep up the 500 ,it means each month you are getting ahead !