Personal loan for mortgage deposit

broisatse · 22 March 2018 at 9:08PM

Me and my wife are looking to purchase the house. We're both higher earners (over £80k each) with good and excelent cradit rating and absolutely no outstanding debt (regular credit card usage, always paid back in full).

We've found a mortgage supplier who has agreed to give us the mortgage even if half of the deposit comes from the personal loan as long as it is within our affordability. We also hold Agreement in Principle on assumption of having that Personal loan on APR of 19%.

Now the only problem is, no bank seems to be interested in giving us that loan and we are being rejected solely because of the purpose of the loan. We've applied for Zopa loan as well, but got rejected without any reason given (even though we've been qualified for their best rate).

Is there any bank or P2P out there who would consider such a loan or is it lost case?

Financially, paying off mortgage and the loan would be the same as our current rent. The loan would also leave a bit of a lump sum to cover any house-related surprises.

Dobbibill · 22 March 2018 at 9:23PM

I think you may struggle to find a lender for this purpose.

It may mean saving for a little longer and postponing the mortgage application.

DCFC79 · 22 March 2018 at 10:12PM

Why not buy a cheaper house so you dont need the loan and you can get the mortgage.

bengalknights · 22 March 2018 at 10:16PM

Pay off the loan save up the deposit then do the application

It wont look as risky then

broisatse · 22 March 2018 at 11:15PM

The main reason we are looking for a loan option is that it is just significantly cheaper then waiting. We would get the full amount in about a year, year nad a half during which we'd pay the entire deposit value in rent.

[Deleted User] · 22 March 2018 at 11:32PM

If you have applied for a number of loans over a short period that will be one of the reasons you are now being turned down, however I agree that most if not all lenders would refuse a loan for such a purpose, you don't say how much the property is/might be, or how much personal loan you will need?
The best advice with an income of 80k and little/no debt would be to save more for the deposit.

dealer_wins · 23 March 2018 at 7:33AM

broisatse wrote: »

The main reason we are looking for a loan option is that it is just significantly cheaper then waiting. We would get the full amount in about a year, year nad a half during which we'd pay the entire deposit value in rent.

You would still pay 18 months of mortgage/loan payments so its the same really.

broisatse · 23 March 2018 at 10:55AM

You would still pay 18 months of mortgage/loan payments so its the same really.

Well yes, but I would pay it into my mortgage, not into sombody else's, so in two years I'd only have 28 years of paying mortgage instead of 30 when I wait. Rent is just a pure expense while mortgage payment is decresing liability and staying within household ledger incresing net asset value.

AstroTurtle · 23 March 2018 at 10:57AM

Dont tell them it's for a house deposit?

No lender with give you a loan to get another loan

thriftylass · 23 March 2018 at 11:07AM

broisatse wrote: »

Me and my wife are looking to purchase the house. We're both higher earners (over £80k each) with good and excelent cradit rating and absolutely no outstanding debt (regular credit card usage, always paid back in full).

We've found a mortgage supplier who has agreed to give us the mortgage even if half of the deposit comes from the personal loan as long as it is within our affordability. We also hold Agreement in Principle on assumption of having that Personal loan on APR of 19%.

Now the only problem is, no bank seems to be interested in giving us that loan and we are being rejected solely because of the purpose of the loan. We've applied for Zopa loan as well, but got rejected without any reason given (even though we've been qualified for their best rate).

Is there any bank or P2P out there who would consider such a loan or is it lost case?

Financially, paying off mortgage and the loan would be the same as our current rent. The loan would also leave a bit of a lump sum to cover any house-related surprises.

How much is the deposit? How much do you pay in rent just now? How much can you save each month and how big a house are you looking for? You earn 160k between you. I guess most lenders struggle to either see why you'd need a loan for a deposit (unlikely they bother about that though) and as others have said they won't give you a loan for a loan.

broisatse · 23 March 2018 at 11:17AM

Dont tell them it's for a house deposit?

Unfortunatelyy that would qualify as a fraud and once the supplier finds out it can cost us the job (solicitors)

House is £500k, we have ~£30k saved up, paying rent of £2k per month and saving £1k-1.5k per month, so we're facing 1.5 to 2 years of paying rent.

What I'm finding wierd is that Santander and HSBC both are fine with a deposit being partially covered with a loan (within affordability) but it seems really hard to find such a loan. I know Zopa is giving those, but we got rejected without any reason given (and it was our first application), I really hope we'll manage to find someone else.

Personal loan for mortgage deposit

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