Mortgage/Deposit Options - what to do?

NRex

Hi, I'm In need of some advice.....


I’m purchasing a new property:

Here are the details:

Existing Mortgage: £125,000
Bank: First Direct
Mortgage Type: 0.79% above Base

Selling Property for: £161,000 (-£125,000)
Equity: £36,000
Minus all Fee’s: £-7,000 (approx selling and purchasing)
Total Equity: £29,000



New Purchase Price: £210,000


First Direct 75% Mortgage: £157,500 (This is the max LTV they will lend) (130,000 @ 0.79% Above Base + £27,500 @ 4.34% Fixed for 2 years)
Plus Total equity: £29,000

Total Purchase Allowance: £186,500


Leaving me to find an additional deposit of - £23,500

Option 1

I can afford to use £5,000 savings leaving me £18,500 to find.

I was thinking of borrowing the £18,500 via personal loan and repaying say over 15years to keep the monthly payments reasonable.

Then after I have renovated the house (using savings) Re-mortgage within a 1 -2 years and tie in the £18,500 loan (as I would have “hoped” increased the property value)


I know this is risky but my only other option would be a……..


Option 2

3 Year Fixed Deal with the Abbey ay 5.99% (with high redemption fees)



So it’s basically a choice between a very low rate flexible mortgage with a loan bolted on "AGAINST" A very high % rate mortgage for the full amount. (The monthly payments would work out approximately the same but I would be paying a lot more capital off with Option 1.

I would realy like to hear anyone’s opinions about my options

Thanks

sammyjammy

Don't do it, sounds like madness given the current state of the economy.

_Andy_

The flaw in your plan is no lender will accept a personal loan as a source of deposit.
Additionally you probably won't find a loan provider who will lend for that purpose.

benjo

Option 3.

Rent and save for a bigger deposit.

Option 4.

Buy a cheaper property.

Option 5.

Get someone to 'gift' you the shortfall in the deposit - becomes complex if the lender feels they have an interest in the property and might not be acceptable to some lenders.

Borrowing money for a deposit wont be acceptable to lenders. It will affect the affordability/servicability of the mortgage also.