Raising funds for a deposit

anh1904

My mortgage product (a very competitive tracker) comes to an end shortly, and the standard building society rate it reverts to is not in the slightest bit competitive (nearly 6%).

The property slump has left me with little or no equity, and the hike in payments when the product ends is likely to leave us in significant hardship.

If we could remortgage, the rates available would potentially save us hundreds of pounds every month, if I simultaneously put the mortgage onto interest only, I could pay off lumps of outstanding credit card debt in double quick time. (The amount "less" the new mortgage would cost would more than cover the cost of a competitivelty priced personal loan to cover the deposit)

The dilemma is this: Where can someone raise finance for a deposit for a mortgage at anything approaching a commercially cometitive rate (8%ish)?

I believe loan companies will not lend for deposits, though will lend for consolidation or a variety of other reasons.

Anyone any bright ideas, my calculations show that the net effect on my overall debt position are in the region of £25,000 over the coming 5 years if I can manage to execute the plan, so it will be worth some effort to try to resolve any barriers or difficulties (as long as it's legal!)

dimbo61

who is your lender and can you find any deals on there website that would suit your needs!
Contact them first and ask.
you have £32k of debt and little if any equity in your property I think you will struggle to get a loan off any company ( without a hugh interest rate)
Have a look on the DFW board and good luck

noxon

I don't think your sums add up. Taking out another loan wouldn't give you a "deposit" it would mean that you had exactly the same amount of debt but some of it at a higher interest rate than your mortgage will be if you do nothing. I also think that if you talk to a broker or look carefully online that you'll find a rate of just under 6% isn't particularly high for someone with no equity and lots of debt. Definitely best to talk to your existing lender about whether they can offer you something, as dimbo61 suggests.

anh1904

Thanks guys, but trust me, the figures do stack up. Existing lender won't offer any products due to equity.

New lender (offer in principle) at 2.5, so interest only at 5.79% Vs interest only (on reduced amount) at 2.5% still leaves over 500 to service the loan deposit, which over 5 years repayment at 8% is cleared. Just a case of finding someone willing to look at the bigger picture.

Divorces really do screw up your finances.