Accepted for a mortgage, and now stumped.

Majestic

Recently, after applying to Natwest for a mortgage my girlfriend and I were offered around £170,000. After deciding as first time buyers around £95,000 would be suffient we then decided that the easiest way to supply the 10% deposit would be via a loan (we have no savings) through my girlfriends employee rate (she works for RBS).

And that's we have come a cropper.

We were refused a loan on the basis of a credit check. Now my own credit file is, after checking with Experian, good, or a least one point mere from the good section.

Not too dishearted by the refusal, We went through Experian's 'save money' finder to locate the best rates on a loan, what came up was a 12% rate from Blackhorse (offering only to homeowners) and two other shyster offers from unknown companys with up to 50% interest. Pfft, no thanks.

So here we are, with a mortgage in principle but without the deposit. We're pretty much resigned to the fact that this house move isn't going to happen, but I thought i'd post on here for some knowledgeable advice that I see posted reguarly on here.

Around four years ago I had an application accepted by Halifax and the money i'd undercut the main asking price by covered my 5% deposit. I'm told this type of dealing is now no longer offered. (I backed out due to unforseen cuircumstance)

We've also looked at the 'Homebuy' government scheme on some new houses (they cover 30% of the house price/mortgage with a 5-year interest free loan), with the builders of the new property offering to match the deposit we put down (5% each) but our mortgage (Natwest) will require 20% on new builds, so we'd probably need to reapply through the developers (Persimmon homes).

So I put it to the Mortgage experts on here, how do I go about generating the deposit without savings, in our current rented accomodation saving for a deposit would take more than 4 to 5 years.

It may also be worth mentioning, the mother-in law and gradmother have offered to help by lending us £2000.

Thankyou for any advice in advance.

shop-to-drop

Have you got anything you can sell like cars? Otherwise probably only borrowing or gifts from family members. Otherwise maybe it would be best to forget for now and save save save. How much are you short? Is it only another £2-3K sounds possible. Remember all the other expenses you need to pay for though as well as the deposit.

_Andy_

It's just as well you were refused the loan.
No mortgage lender will accept a personal loan as a source of deposit (rightly so).

beecher

You can't generate a deposit without savings unless you have someone willing to give you the money, or there's something you can sell. Go onto the Debt Free Wannabee forum for help on cutting back on your expenses and maybe you can cut the number of years it'll take to save the deposit. While you're saving get your credit file repaired as if it isn't good enough for a loan, it won't be good enough for a 90% mortgage either I'm afraid.

Kavanne

i can't believe if your gf works for RBS she would consider doing this. a loan for a house deposit is not within their lending criteria so you shouldnt eve be applying in the first place

Mrs_Bumble

The mortgage in principle was just that, based on the credit search at the time and what you had told Nat West they would be prepared to lend you around the £170K, it isn't a guarantee of a mortgage.

As has been said above, it is not acceptable to any lender that the deposit is derived from a loan.

If you had managed to take out a loan for £10,000 the repayments on this would have seriously detracted from what you can borrow for a mortgage as well, as the monthly committment is deducted.

You are talking about a vendor gifted deposit above and that is back from the day when a 95% LTV mortgage was still available.

Everytime you apply for credit of any kind, this includes anything with a monthly contract like mobile phones etc, a credit search is carried out and this reduces your overall score, also future lenders get twitchy seeing too many searches on a profile. Your loan activity recently will have harmed both of your credit scores.

A 10% deposit is an absolute minimum and you will need to save it, along with solicitors costs, arrangement fees, valuation fees, moving costs, money for things for the house, stamp duty if property is above £175,000 ( this could reduce again this year).

hostman

So you earn enough money to borrow up to £170k, but can't save for a deposit?

Reduce your outgoings, save and try again in a year or two.

SelbyJay_2

The harsh truth is no savings; no house. If you really want to move, pay off all other debts as quickly as possible, get a second job, sell anything that you dont use/need anymore.

I cant wait to move, but i owe £3k on cards and until they're paid and i can save for a bigger deposit, moving just isnt an option. And i have £10k equity!

LittleMissAspie

Majestic wrote: »

saving for a deposit would take more than 4 to 5 years.

Then you should have started saving 4 to 5 years ago. Cut your outgoings to a minimum, think of ways to make extra money, save like mad and hopefully you will be able to buy in a couple of years.

Conrad

Some builders such as Miller homes offer equity share schemes which some lenders will accept.

RBS / N West - as you both will be aware from the last 2 years news, that lot made the biggest corporate loss on record, and of course are massivly exposed to all those toxic debts in the USA. Not a lender I would try as my first port of call, as they are now ultra cautious.