Applying for alternative funding in a time of financial difficulty can be a daunting task, particularly as these loans have the potential to affect benefits you are already receiving. But with research on the subject as well as sending updated information to HM Revenue & Customs, you can gain the financial aid that you need without losing existing benefits. In this article, we will be providing you insight into whether or not childcare allowance can be affected by further lending.
What Is Further Lending?
Further lending is the process of borrowing more money from your current mortgage lender to provide income for expenses or home renovations. This can be spread over a long-term set of repayments and often times is much cheaper than a personal loan or other forms of finance. This is beneficial for those that find themselves in financial difficulty as money can be used for home renovations and other elements.
What To Consider Before Applying For Further Lending
Before considering further lending it is important to set out a budgeting plan. This will ensure that you are able to pay back the money you are borrowing. By contacting your mortgage lender beforehand, they are able to tally up the outgoings and incoming funds to ensure you can afford it. They will also perform a stress test on your mortgage increase to make sure you are able to cope with the interest rate.
In addition to this, you should make sure that there are no hidden fees when increasing your mortgage as this will need to be accounted for. Finally, it is important to work out the costs of the borrowing and make sure that you can work this into your monthly repayments. This will ensure that everything runs smoothly before applying for this alternative form of finance.
Alternatively, there are emergency finance options that can be applied for that are not put against the value of your home. These are better suited to those with poor credit as guarantor loans and other personal loans options can be paid back in a smaller time frame and are specially suited to accommodate those with a poor credit score.
How Can It Affect My Child Care Allowance?
Due to child benefit working on the amount of income that a family has, this is something that you need to be aware of when filling out a further lending application. Though you will still receive the full amount of child benefit payment, taxes will have to be paid if a member of the household has more than £50,000 per year. This equates to additional taxes of 1% of your child benefit for every £100 over the £50,000 threshold. In order for your child benefits to be accurate, you will need to inform HM Revenue & customs if your income changes by over £2,500 as this can lead to your taxes changing.
Will It Affect My Credit Score?
Though the benefits themselves will not affect the credit score, it is the circumstances that may affect you from getting a loan. Therefore, a benefit of any kind will not appear on your credit score and will not prevent you from taking out a loan. This is crucial to remember as this means that you are likely to pass eligibility checks at the initial stage of applying for a loan and can maintain your child benefit.
With this in mind, it is important to budget accordingly before applying for further lending as you will need to be sure you are able to pay off the additional costs on your mortgage as this can lead to financial difficulty in the future.
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