Professional Pilot Training (includes ground studies)A forum for those on the steep path to that coveted professional licence. Whether studying for the written exams, training for the flight tests or building experience here's where you can hang out.
Hi, I have recently been accepted into CTC Wings cadet programme and was advised to use BBVA. My parents were happy to use their house as security for the loan application, however the mortgage did not have enough equity for BBVA's liking so it was not accepted. I'm looking for alternatives to funding for the CTC cadet programme. Has anyone experienced this or have any ideas? Please help!
I am surprised this problem doesn't come up more frequently on these forums.
BBVA is a commercial bank that specializes in this type of lending in conjunction with a few of the major flight training schools.
The lending criteria is quite tight in respect of the amount of equity they will lend against. Including the proposed borrowing, the total sum shouldn't exceed 60% of the properties value. That is quite a restrictive sum for anything other than a mature mortgage on quite a valuable property.
That isn't the only criteria either. They also want to satisfy themselves that the guarantors can reasonably carry the loan payments in the event of the primary borrowers default. As a result this avenue is only going to available to those who choose it, who can also satisfy these criteria.
For borrowing these large sums of money (in the £80,000 to £90,000) range, you are either looking at savings, savings with unsecured borrowing (usually capped at £25,000,) or mortgage borrowing from another bank. In the latter case this may be a re-mortgage for the existing debt plus the required advance, or a second mortgage to cover the required loan. With the latter two, this is secured borrowing and would still have to satisfy the lenders criteria for such loans which may or may not be less restrictive than BBVA's, depending on the borrowers personal circumstances.
In summary you need to sit down with your parents and discuss the options, or go out to work and start saving.
Do you really want to bet your parent's home against your getting an airline job in the current market?
You can't "bet your parents home" only they can. Most parents are fairly shrewd when it comes to lending to their offspring. The route the poster has been selected for, has been placing almost all of its "wings cadet" graduates with airlines straight after their 16 month courses recently. That is no guarantee of anything in the future of course, but given the "current market" you can perhaps understand the posters question.
Hi, Is there no other bank that you would know of that specialises in these sort of loans like BBVA? You're right, I do have to sit down with my parents and discuss things. Saving might be an alternative I have to look at too. It's just so painful to have to work away from an opportunity like this especially knowing that I was accepted. I'm also only allowed to re-apply one more time, I have met a few individuals who did that who were in my position and got rejected second time even though they passed first time. I was also trying to look at professional loans and most seem to be capped at £10000 (Bank or Govt). And personal ones capped at £25000 as you said unsecured loans. But nevertheless I will sit down with my parents. I only have 6 months before they terminate this offer.:
Do you really want to bet your parent's home against your getting an airline job in the current market?
I know it's a risk. However my parents and I did discuss the pros & cons of these actions. Having discussed with CTC about the number of cadets they finish training and how many get into airlines we (my parents and I) were convinced to take this action. I also believed with that much at stake I would/will give everything to make my priority higher on airline selections. There's no guarantee of a job of course but the chances seem high.
Don't get too hung up on BBVA. Although they package the product as a specialized loan and build in a deferred payment schedule etc. It is in reality simply a second mortgage. It is a secured loan on (UK or Spanish) property.
Any mortgage can effectively do the same thing. The BBVA rate of interest is 2.5% above UK base, making it 3% variable. There are any number of deals (introductory or otherwise) that might offer similar rates of interest. The question is do your parents want to increase their mortgage debt (and repayment schedule) by another £90,000? That would be the risk profile, and of course it may not be either possible or desirable. In that case this type of lending would not be an option.
Unsecured borrowing is normally capped at £25,000 and unless you are a very good credit risk, you would still need a gurantor to assume the payments or debt in the case of your default.
Professional (government backed) study loans still require an unsecured lending application to the couple of banks that may offer them, and even then they are limited to maximum of £10,000.
If you are able to follow this course, with all the attendent risks considered, it is probably one of the best fast track avenues into an airline career at the moment. However it still carries a significant element of risk which shouldn't for one minute be underestimated.
If this particular avenue proves to be out of reach, then there are other methods that you can consider and pursue. It is a very difficult position to be in, and I wish you luck.
I would only take this sort of risk if you have a fall back profession. That way if you graduate from CTC but do not immediately secure employment you can return to your original profession and cover the loans. You must also take into account the costs of seeking airline employment ( travel for interviews etc ) coupled with the cost of keeping your licence and ratings current.
I too had the same issue as you with regards to funding for the CTC Wings programme back in 2009. Unfortunately my parents weren't willing to 'sacrifice' their home to cover the costs, even though I was 'disappointed' at this news. Looking back, I'm glad they said no as I didn't want to be a burden on them for many years to come.
This then lead me to go down the modular route (at the time I thought Integrated was the only way to go in terms of securing a job). Looking back, I made the right choice.
CTC had always been my preferred choice of FTO, so I undertook my CPL/IR training there from June '11 to Sept '11 (CTC Takeoff) after completing the necessary hour building and ATPL exams. I decided not to do the AQC with CTC as I read through the ATP thread on here and the outlook of getting a job looked slim to zero chances (for us Modular guys anyway). I have since been offered a Type Rating with Ryanair, and I reckon my total expenditure to date (incl. the RYR Type Rating) has been about £65-£70k. It's took me 5 years to get where I have, working as a partly qualified architect to help fund such courses, along with a few bank loans. Good thing about this is, if I don't get to do much flying with RYR, I have a good supply of architectural work to keep me 'ticking over'.
Just don't jump in to an integrated course without first looking at alternatives, like the Modular route. I had so much fun doing it this way and highly recommend this to anyone going down the path of becoming an airline pilot.
Thank you all for the advice and opinions for what I should look into, even if some are a bit harsh on my decision but I guess the truth hurts sometimes. To my defence I haven't had a lot of time to sit down and plan this since I have been in my final year of my undergraduate degree in University. I always left my options open and happened to apply for this and ended up getting through and pass the assessments. It happened so quick and the way they presented the funding options to me I thought it wasn't going to be a problem (I guess I thought wrong). I guess I just wanted to get flying as quickly as possible. I have been in education for so long trying to maximise my opportunities and I'm so tired and just want to get flying. Clearly I need to do more research and planning. Especially reading into which are more suitable for me financially in terms of the modular route or integrated route. I would appreciate and welcome more opinions and advice
Let's be fair, CTC has a good track record of getting people into the right hand seat of airliners. However, they are a for-profit business planning to charge you around £90k for this, and any decision you make should bear that clearly in mind.
By comparison, self-managed, you can get the same licence and ratings for around £40k. With a reasonable graduate job, a lot of dedication, and a very frugal lifestyle, you could reasonably do that in 3 years and probably at the end have around a £20k debt to pay off.
The downsides to doing it this way are firstly that you arrive on the job market realistically 2 years later than otherwise. At age 21 now then you're reducing your potential flying career from maybe 42 years to maybe 40. Also you don't have CTC's placement system behind you, and some big airlines do prefer integrated graduates.
The upsides are that by and large the non-airline flying jobs (FI, air taxi, parachute dropping) tend to prefer people with with real GA experience, which you won't get on an integrated course, that you've had the chance at PPL level to realise if you're really not suited to this having only run up fairly moderate expenses, that you are £70k less in debt when you hit the job market, and that you have a job to fall back on. Oh yes, and your parents aren't at risk of losing their home.
"Fears about losses at Spanish banks have hit shares across Europe. The banks include Banco Santander and BBVA, the biggest banks in Spain. Ten of the 17 banks were also put on negative credit watch, meaning that further downgrades are possible."
This may seem like scaremongering on my part but speaking from experience I had a lot of cash in Kaupthing Edge ( Icelandic bank ) when it went bust in 2008. I eventually got the money back but it was a worry for a while. Trust no one in finance, they will only state what they want you to think to get your capital.
Trust no one in finance, they will only state what they want you to think to get your capital.
Yes, having bought an endowment mortgage for my first house (age 23), I was seriously misled and lost a lot of money on that particular bit of financial chicanery. I've got a lot more cynical in my (relatively) old age.
Although apart from property (in the long run) the best investments I've made were always in my own education and training.
You have my respect for bothering to seek advice on this terribly important decision. At 21 and with a University Degree under your belt it is very difficult to reign in the horses, carefully consider your options and make a mature decision. Believe me, many of us have been where you presently stand.
I only decided to become a commercial pilot aged 30. Even 5 years ago that was not considered too old. And so it proved because I did my modular training and got 'lucky' with a job with Europe's most hated airline within a few months of completing my fATPL. At the very same time I passed selection for CTC but went for the bird in hand rather than sit in a pool for Easyjet.
But, and this is a big but, 5 years of professional work in another industry and a wife with a good career meant I had a solid back up plan. And if I did not get a job in an airline within months I was committed (and quite eager) to go the longer Instructor route.
My back up plan enabled me to take the risk of being out of work despite my financial outlay without fear of bankrupting my family and it also showed my commitment to the new career.
Incidentally, I started training when all the talk was of a pilot shortage. CTC and Cabair told me a job was almost certain. I actually went modular instead for family and financial reasons. By the time I finished my PPL and started my ATPL ground school the talk was of a possible recession (The annoyingly prophetic Wee Weasly Welshman was a regular voice on here at the time) and as I was doing my IR Lehman Brothers went bust and the Recession began!
My point: You need a back up plan. Assume the worst and plan accordingly. Research, make contacts in the industry, and don't risk other people's money. Above all, remember that you are young enough to do all these things and still be sitting in the seat of an airliner 5 years before I was.
Last edited by Mikehotel152; 18th May 2012 at 09:00.