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Loan for Deposit?
scrivomcdivo
Posts: 132 Forumite
Would people recommend a loan for a deposit so that there are more mortgages available?
We don't have a deposit at the moment and so, would need a 100% deposit. We're looking at property's valued at £90000 and so, we would look at getting either a loan for either £4500 (5% deposit) or £9000 (10% deposit).
What do people think?
We don't have a deposit at the moment and so, would need a 100% deposit. We're looking at property's valued at £90000 and so, we would look at getting either a loan for either £4500 (5% deposit) or £9000 (10% deposit).
What do people think?
0
Comments
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Whatever loan you take will directly affect the mortgage you will be offered.
Eg, £9,000 with payments of £300 per month will reduce the available mortgage to you by approx £14,400 (assuming a 4x income multiple).
Also lenders do not like you borrowing a deposit.
In short, there is no advantage whatsoever in doing so.0 -
A loan for the deposit is not helpful.
A 5 year loan (to get low monthly payments) then living off that for a little while while you save your income would get you a deposit from your own funds and the long loan term means it wouldn't harm the borrowing limit so much. You can pay back the loan early, as funds allow.
Make sure that you can still pass the affordability test for the mortgage after allowing for the loan repayments!
I think that you should really try saving for a 5% deposit. The loan only makes sense if your rent payments are so high that they prohibit you from doing that.0
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