Good idea? Or plain crazy?

monsoon_2

I need £112.5k for a house. Have £100k offer of mortgage and £6k deposit. Need £6.5k. May be able to cut this to £5k.

I want to get this £5k from a SBT and pay off from remortgaging in 12 to 18 months.

I can borrow the £5k from friends and get the SBT card after mortgage is assigned so as not to affect the mortgage.

Is that a mad idea? I believe it would help me get the house I want at a reduced cost.

The pitfalls I can see are:
1. being refused on the SBT card.
2. Being refused on a a later 0% card
[i don't anticipate this]

Can anyone give me any advice on this? And if it is an OK idea - what SBT card would be best?

Mant thanks

Clariman

monsoon wrote:

I need £112.5k for a house. Have £100k offer of mortgage and £6k deposit. Need £6.5k. May be able to cut this to £5k.

I want to get this £5k from a SBT and pay off from remortgaging in 12 to 18 months.

I can borrow the £5k from friends and get the SBT card after mortgage is assigned so as not to affect the mortgage.

Is that a mad idea? I believe it would help me get the house I want at a reduced cost.

The pitfalls I can see are:
1. being refused on the SBT card.
2. Being refused on a a later 0% card
[i don't anticipate this]

Can anyone give me any advice on this? And if it is an OK idea - what SBT card would be best?

Mant thanks

I think you have underestimated the risks and you have not thought about the consequences of the risks. You should also give though to the likelihood of the risk coming to fruition. Starting with your list and adding to and expaning them:

1. being refused on the SBT card.
Consequence: you may have your house, but you have no means to pay your friends back the £5K that you owe them. They are £5K out of pocket and you either don't pay them back - leading to really bad feeling - or you have to sell your house and incur all those costs and the difficulty of finding new accommodation. Personally, I think you friends would be mad to lend you money to do this and I would not ask any of my friends to do it for me.

2. Being refused on a a later 0% card
OK, so at this point you will have paid your friends back the £5K from the credit card, but you are carrying that additional debt. If you do not get a subsequent card to BT this on to, then you are paying, for example, 15.9% p.a. for this pseudo-mortgage. Can you afford that ?

3. You get card but not with a credit limit of £5K
I would say that this is a very realistic scenario. Consequences similar to the 1 & 2 but with lower sums involved.

4. You can not remortgage - because house prices have not risen
Now you don't explain your thinking here. Why do you expect to be able to get a bigger mortgage in a year's time ? Are you making the assumption that house prices always go up ? In the current climate, I would not make that assumption at all. Depending which survey you read, house prices could fall in the next 12 months - at best they might rise by a couple of percent, so I would not expect to able to release any more equity and get a bigger mortgage.

5. You can not remortgage - because of your other credit history (credit card & existing mortgage)
Similar consequences to no.4

Clariman

Clariman

Just to make a final point.

If I was considering getting additional funds from another source to subsidise my mortgage, I would only entertain the idea on the following basis

1. I would not borrow money from friends to do it. Friendship is too important.
2. I would get the credit card loan first and I would only do so if I knew I could afford to pay for the mortgage and pay for credit card interest at 15.9% APR every month.
3. I would consider getting a personal loan to cover the gap rather than a credit card. Interest rates are lower.

Other approach. Why not go back to your lender and see if they will add on another £5K.

Another thought - why won't your lender give you the full amount for the mortgage ? Answer - because they may be concerned about your ability to pay it. Maybe you should give that some thought too.

David_Mee

Whilst agreeing that there is probably a good reason for them not giving you more credit - a safer way with CC's might be to use the Life-of-Balance cards to move the 5k too - getting you a "mortgage" of 4.9% - however you must make sure you can pay it back otherwise it simply isn't worth contemplating

YorkshireBoy

monsoon wrote:

Can anyone give me any advice on this?

You don't say whether the shortfall is due to your lender's affordability calculations or their LTV criteria. If it's the former, you should take this as a warning. If it's the latter, you may have some scope for raising (and repaying) the extra sum required.

However, with 0% SBT/BT credit cards do not forget that, with the possible exception of MBNA at £5, most cards will need repaying at 2% of the outstanding balance per month. The same is true of LOB cards.

So, you will have to find around £100/month to start with.

In light of the above, you may find an unsecured, perhaps flexible, loan is a better option.

jonesMUFCforever

I'll be the the one to be blunt then.
I think you would be crazy!!

monsoon_2

Thanks everyone for the good advice.

The thing is, I think we can afford the repayments. I am a mature student and work nights - if the worst came to the worst I could get another job.

Alliance and Leister would lend us the money if i could get pay slips but my boss doesn't issue them (don't ask me why - he wrote a letter but that isn't good enough for them).

Also HSBC are not taking my wife's agency work into account so they underestimate our ability to repay - her earnings have been regular for over a year now and care work is always available.

Its just that we don't tick all the boxes to sanction the required amount. And we need to raise some capital. The mortgage is actually just a little more than the rent we've been paying.

Given all this, I think the life of balance

The_Boss

Dunno if it has been mentioned, but I thought all mortgages were subject to clearing existing debt. I know mine and a few friends were like that. With us, nothing was mentioned until the final confirmation came through saying that the mortgage would be issued subject to proof of clearing existing debts - our solicitor and lender didnt mention this at all either and the solicitor said it is standard practice.