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Loan for a deposit? Motgage virgin!!!

Hi there! I am a bit of a novice when it comes to mortgages but have been seeking advice from an advisor. I do have a few questions though...

I have an agreement in principle from Nationwide for £135k. The house I am interested in buying we could get for approx £145k. I want to put down a 20% deposit to get a good rate but can I take out a loan to do this?

I have done a LOT of budgetting and, basically, I have £1300 disposable income left after all my outgoings (no loans or anything, just household bills). I went on a mortgage calculator and worked out a £116k mortgage (£145k house - 20% deposit) at 6% would be £750 per month and at £7% would be £839 per month.

I also went on moneysupermarkey.com and found a loan of £25k from HSBC at 8.7% over 8 years that works out at £358 per month.

Do you think this is feesible and is it allowed?!?!

Comments

  • LeeSouthEast
    LeeSouthEast Posts: 3,822 Forumite
    Part of the Furniture Combo Breaker Debt-free and Proud!
    No you can't. As far as I am aware, no lender will accept a loan for a deposit. Think about it logically for a moment ;)
    Starting Debt: ~£20,000 01/01/2009. DFD: 20/11/2009 :j
    Do something amazing. GIVE BLOOD.
  • How about paying for some of the deposit on credit cards then transferring them to one with 0% for however many months? I'm guessing that is going to have a big impact on my credit rating and affect my mortgage? But asking the question anyway!!!
  • The deposit needs to be money you have, not money you've borrowed. Otherwise you'd be taking out a loan of 100% of the property, and this isn't available any more. To have a 20% deposit means you have the money in your savings pot, not borrowed from another source.
  • as said above, no you cannot borrow your deposit, whether it be a loan or on credit cards. firstly, no lender will accept this as a source of deposit, and secondly when they calculate how much you can borrow, they will take any existing commitments you already have into account and knock this off the amount they are willing to lend. so having a large loan or large credit card debt (regardless of what the apr is) will have a large effect on how much you can borrow in the first place. time to get saving i'm afraid! shouldn't take you long if you have £1300 a month to save up....
    2011 wins: £481
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  • _Andy_
    _Andy_ Posts: 11,150 Forumite
    No lender will accept a deposit from a loan or credit card. You need to keep saving - what you're planning isn't going to happen.
  • Mrs_Bumble
    Mrs_Bumble Posts: 1,028 Forumite
    It isn't acceptable to provide a loan through borrowing.

    If you did take out a loan at that amount a month it would mean that you would have a deduction of 4296 a year from your income and mortgage affordability drops.

    Just keep saving considering taking on that amount of credit committment and a mortgage just isn't a good plan.
    I am a Mortgage Adviser

    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Get a family member to get the loan out, then once mortgage is in place, you take out a loan to pay them back ;)

    If it saves on APR, then thats a good thing surely..
    Live life...
  • Thanks for all your advice- back to the drawing board for me!!
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