Can i Use an unsecured Loan as Deposit for a house?

Celina4u
Celina4u Posts: 6 Forumite
First Post First Anniversary
in Loans
Hello,
Apologies if this has been discussed in another thread (i did search)

I have a secured job with a house hold income of £100k a year, I have heard some lenders don't mind if you use a loan as long as you have a steady job and can pay off both the loan for the deposit and the mortgage
I understand it's not smart having 2 loans but I have done the maths and can cover both loan and mortgage
I have been renting for far too long and I have seen a new build in a perfect location
I can save for the 5% for deposit, (help to buy) but it will take me another year

I will like to know which lendors will provide a mortgage if my deposit is from an unsecured loan
Thanks
«1

Comments

  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
    Name Dropper First Post Photogenic First Anniversary
    1) This question would be better placed on the Mortgages & Endowments board.

    2) As a rule of thumb, the majority of mortgage lenders do not like/accept borrowed deposits.
  • Oakdene
    Oakdene Posts: 2,560 Forumite
    Combo Breaker First Post
    I doubt it as you will have to declare that the money is a loan from a bank & this will affect your affordability...
    Dwy galon, un dyhead,
    Dwy dafod ond un iaith,
    Dwy raff yn cydio’n ddolen,
    Dau enaid ond un taith.
  • nic_c
    nic_c Posts: 2,928 Forumite
    Name Dropper First Post First Anniversary
    It depends how soon after the loan you want the mortgage. You tend to need to give 3 months bank statements, so if your balance goes up because of the loan, then its obvious where your deposit has come from. Longer than this and technically the loan could have been for something else and you had the deposit already ;)

    As has been said, some lenders don't like deposits funded by loans. You will have to take loan repayments into account on affordability calculators - its not whether you believe you can afford to service both loans but whether the mortgage company does and they use National Statistics living expenses.
  • Celina4u
    Celina4u Posts: 6 Forumite
    First Post First Anniversary
    Many thanks for the comments so far
    I spoke to an advisor who said there are some lenders out there that wont mind if the deposit is loaned but they are not the cheapest, i guess my last option is to get a family member to 'gift' that amount and after a month or so of moving in, I can then take a loan to repay that.
    I dont know if this is illegal or frowned upon, as mentioned - i can cover both loans
  • Oakdene
    Oakdene Posts: 2,560 Forumite
    Combo Breaker First Post
    Celina4u wrote: »
    Many thanks for the comments so far
    I spoke to an advisor who said there are some lenders out there that wont mind if the deposit is loaned but they are not the cheapest, i guess my last option is to get a family member to 'gift' that amount and after a month or so of moving in, I can then take a loan to repay that.
    I dont know if this is illegal or frowned upon, as mentioned - i can cover both loans

    You may need to get said family member to write a letter saying the money is in fact a gift & is not repayable.
    Dwy galon, un dyhead,
    Dwy dafod ond un iaith,
    Dwy raff yn cydio’n ddolen,
    Dau enaid ond un taith.
  • Celina4u
    Celina4u Posts: 6 Forumite
    First Post First Anniversary
    @Oakdene, not wanting to complicate things but if i cant get the full amount from Family and a non family member is willing to give the full amount, can I still classify that as a gift? or does gift have to be a family member?
  • Oakdene
    Oakdene Posts: 2,560 Forumite
    Combo Breaker First Post
    Celina4u wrote: »
    @Oakdene, not wanting to complicate things but if i cant get the full amount from Family and a non family member is willing to give the full amount, can I still classify that as a gift? or does gift have to be a family member?

    They would be classified as a gifts if you got a letter from each source making up the total amount stating that they are gifts & are not repayable in any way. Basically your mortgage company needs to be reasonably sure that you're not going to be paying the money back each month to them as this affects your affordability.
    Dwy galon, un dyhead,
    Dwy dafod ond un iaith,
    Dwy raff yn cydio’n ddolen,
    Dau enaid ond un taith.
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    Combo Breaker First Post
    Celina4u wrote: »
    Many thanks for the comments so far
    I spoke to an advisor who said there are some lenders out there that wont mind if the deposit is loaned but they are not the cheapest, i guess my last option is to get a family member to 'gift' that amount and after a month or so of moving in, I can then take a loan to repay that.
    I dont know if this is illegal or frowned upon, as mentioned - i can cover both loans

    it is clearly fraud, as you are obtaining a mortgage under false pretenses
  • Gambler101
    Gambler101 Posts: 580 Forumite
    I would do an honest and realistic income and expenditure, just to make sure that you are not going to over commit and run into financial problems down the line.

    Use the template from the "debt free wannabe" board, just to reassure yourself that what you are taking on wont end in a disaster. No need to post it (unless you want to), but as its the biggest financial commitment you are ever likely to make, you need to make sure its affordable :)
    The instructions on the box said 'Requires Windows 7 or better'. So I installed LINUX :D:D
  • GingerBob_3
    GingerBob_3 Posts: 3,659 Forumite
    CLAPTON wrote: »
    it is clearly fraud, as you are obtaining a mortgage under false pretenses


    But I bet not many (e.g. none) people have been prosecuted for it.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343K Banking & Borrowing
  • 250K Reduce Debt & Boost Income
  • 449.6K Spending & Discounts
  • 235.1K Work, Benefits & Business
  • 607.7K Mortgages, Homes & Bills
  • 173K Life & Family
  • 247.7K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards