Loan for a mortgage deposit?

meeshe76

I'm a first time buyer just sick of renting and desperate for my own permanent home! I'm looking at all options and someone has suggested I look into getting a loan for a deposit to increase my chances of getting a mortgage and for cheaper interest rates (especially in this current financial climate!).

But would this not impact the amount of mortgage I could borrow? I already have £7k in credit card debt which I'm paying more than the minimum each month to try and get it down. I'm aware this might reduce the amount I could borrow in mortgage too.

It'll have to be 100% mortgage for me otherwise!

Any advice?!

poppysarah

You can't have a 100% mortgage at the moment. There aren't any. Do you think it is sensible to take out a loan for a deposit?

Why haven't you been saving one?

ajay_182

Dont be so stupid, your in debt and thinking of taking more debt out to get even more debt with a mortgage. Ive been there and i would say Save for a deposit, pay as much of your debt and then buy a house. It may seem like a good idea when your in a rented place. The idea of buying your own house seems great, but dont screw yourself up for it. And dont just go out and get a loan in haste, it will only end in tears in a few years.

lynzpower

I thought that getting a loan for the deposit has always been "forbidden" certainly when I got my mortgage in 04 it was.

Honestly, you sound like me years ago. IN debt I was paying off, no savings whatsoever, how will you pay the SDLT? how will you pay for the uinsurances? Your solicitor? Stick it on the debt?

I realised I made a tremendous mistake when I bought my flat and that was with a small deposit ( more than your debt though) once i realised I sold it,. Easier said than done these days.

Luckily for you 100% mortgages are gone and hopefully never to return to this marketplace. they have caused nothing but misery- especially for those like you.

What do you think happens whne the property loses value on a 100% mortgage? Do you know?

Mini_Bear

Hi OP - i agree with the other posters dont saddle yourself with a mortgage and more debt. House prices went down 1.8% last month according to nationwide, and current redundancies will take 3-6 months to filter into the housing market.
You have not given us any details on your earnings, job security or reason u want to move. Are you a troll? If not i suggest u move out of ur current rented accomodation into something else, perhaps a cheaper house share - cut out all the fripperies and concentrate on getting rid of all your debt before taking the biggest financial decision of your life.
Good luck, and dont rush such a decision.

meeshe76

Blimey thanks everyone! Good answers and tells me what I already suspected - people have been suggesting the idea to me and I thought it was a bit mad to get a loan for a deposit! So I won't consider that, thanks.

The reason I haven't been saving for one is because I've been saving for the solicitors fees and the other stuff first! I currently have £2,300 from saving £100 a month. I can't afford to save any more than that without stopping living life.

I earn £22k a year and have a second job too which gives me an extra £2k average a year. Not brilliant! My job is secure. My credit card debt is from being a mature student in order to get into the job I wanted, at one point I worked 3 jobs but still needed to use my card for some expenses! That's life. If I didn't do that I'd still be in my £12k a year dead end admin job!

I'm on the eligible list for the MyChoice scheme and looking out for new build schemes on offer. This could be another option so we'll see.

Any more suggestions welcome!

BettyDebt

Surely it would be a good idea to work out whether you'd afford to save more, quicker if you didn't have the credit card debt? Taking (often) crippling credit card interest, in the long run you might be better off paying the cc first? Then saving for a deposit etc. If you currently only save £100 a month then you are probably not in the best position to by a house - with or without a deposit. I'ts highly frustrating I know - I'm in the same boat!

patch3228

It's not a good idea for you to take on more debt, as you would be prime candidate for:

http://forums.moneysavingexpert.com/showthread.html?t=1517673


Clear your CC and you will probably see a dramatic rise to your savings, as £100/ month is definitely not enough to build up a substantial deposit.

Good luck!

lil'H

I'd put the 2,300 you've saved straight of the credit card, unless the credit card is 0%. You aren't making much interest on any savings, so clear the debt ASAP, then start saving like mad for a deposit.

meeshe76

Good point about putting my savings on the credit card - but it is 0% interest so that's ok. God I feel trapped! One of the criteria for the home buy schemes is to have £2,500 in savings to cover the solicitors fees so I want to keep that really. I'm paying £300 a month to get the credit card down although some months it doesn't work out that way. I have a car and pets so that can sometimes give unexpected expenses. I'm somewhat unhappy in my rented flat although it isn't bad and the rent is reasonable, and at 32 years old, single and wanting to get my own place before I go mad in my 'student style' flat! But I guess I'll just have to put up until I'm in a better position!

lynzpower

One issue is that you seem to have so many "unexpected" things to pay for? Im not sure why as any of us with pets/cars/boilers knows you have to pay out for them sooner or later.

It sounds like you are not budgeting, and Id be inclined to deal with this before you even consider buying somewhere.

Take a trip over to the DFW board and they can all help with budgeting issues :beer: