Personal Loan As A Deposit?

youstolemyname

I am in the unfortunate situation where I currently have zero deposit and being realistic it would take me approx 3 years to get the £20k deposit I need

Would it make sense to take out a personal loan over say five years for the deposit amount, paying interest only repayments on the mortgage for those five years and then reverting to repayment after five years or am I better off saving for the three years and doing it all then?

I am just worried that if I don't buy a house soon I may both miss out on any possible rise in value and also need an even bigger deposit in three years time on the same property.

Thanks for any advice...

_Andy_

No it wouldn't make sense for several reasons

1) No lender is going to let you go IO with no repayment method
2) No lender will accept a personal loan as a source of deposit
3) No personal loan provider (that I'm aware of) will lend for that purpose.

youstolemyname

Thanks Andy, seems the independent mortgage advisor I saw was talking poppycock then?

He claimed I could get approved for the mortgage first then take out a 'home improvement loan' and use that as the deposit after being approved and telling them I had the deposit....

Best get my piggybank out then.....

aah

I've done that. But not as a ftb.

opinions4u

youstolemyname wrote: »

Thanks Andy, seems the independent mortgage advisor I saw was talking poppycock then?

He claimed I could get approved for the mortgage first then take out a 'home improvement loan' and use that as the deposit after being approved and telling them I had the deposit....

That would be a fraudulent declaration. If you agree to it you are committing a criminal act.

You should report this person and take your business elsewhere.

poppy10_2

opinions4u wrote: »

That would be a fraudulent declaration. If you agree to it you are committing a criminal act.

You should report this person and take your business elsewhere.

Agreed- this shyster needs reporting before he entices others to commit mortgage fraud, like these guys.

property.advert

You know sometimes, you just cannot go along without bending some of the rules. Some rules are actually there to be bent.

It is right that no-one is going to give the OP a mortgage but I understand his frustration. However, he must ask himself why he has zero money. Not even 1% saved.

In the bigger picture, say he had 10% but needed 20% then it is not the worst thing to say that maybe he will sell his car to get the other 10k and then perhaps needs to borrow it instead. Pulling down on available credit lines is not advised but sometimes has to be done. The trick is to get the timing right.

The right answer is not always the right answer, if you know what I mean.

opinions4u

He claimed I could get approved for the mortgage first then take out a 'home improvement loan' and use that as the deposit after being approved and telling them I had the deposit....

I used to underwrite personal loans. If you weren't a homeowner at the time of applying, after checking what you meant by home improvement I would invariably decline the application.

If they said it was to improve a home that they were about to buy I would decline it on the basis that they should adjust to their new commitments before taking on a loan.

Poor risk decision to lend somebody funds to improve a home they don't even own.

babyfreckles

I had a mortgage appointment on Saturday with a well known bank. This is our first ever mortgage and we are in the same situation as you - no deposit.

Speaking to the bank, the lady said that you are not meant to, but people do do it. If we went with the said banks mortgage, they would not offer us the loan so we would need to go to another bank for this. This is what we are more than likely going to do - Although our loan will only be for £10,000.

How are we supposed to get on the property market if we do not earn enough money to be paying the rent, and saving hundreds of pounds a month? This is the only way around getting a property for some, me included.

_Andy_

OK go ahead and make a fraudulent application whilst being in a large amount of debt before you've even moved in. Very moneysaving.

benjo

babyfreckles wrote: »

I had a mortgage appointment on Saturday with a well known bank. This is our first ever mortgage and we are in the same situation as you - no deposit.

Speaking to the bank, the lady said that you are not meant to, but people do do it. If we went with the said banks mortgage, they would not offer us the loan so we would need to go to another bank for this. This is what we are more than likely going to do - Although our loan will only be for £10,000.

How are we supposed to get on the property market if we do not earn enough money to be paying the rent, and saving hundreds of pounds a month? This is the only way around getting a property for some, me included.

With the greatest respect if you dont earn enough to pay rent and save, then you perhaps dont earn enough to pay a mortgage and save.... and you really do have to keep saving once you have a mortgage, since there are always roof tiles that slip, guttering that falls down, central heating that needs attendance... ad infinitum.

Getting the deposit is one small step, the next huge step is paying for the property and keeping it in good condition. Dont take this as a negative judgement - it is just the reality of my experience of just how much it costs to have your own home.