Proof of deposit - Mortgage

JamesTown_3

I have come onto this thread a little late but perhaps I can clarify the situation.
Proof of deposit: Some lenders may ask for this prior to issuing a mortgage offer. They can ask for not only proof of deposit but its source. This usually involves providing bank statements. In the case of a gift from a relative for example they will require a letter from the doner. This should confirm that the loan is a gift, is non-refundable and that the doner will not have any interest in the property.

Loan: If you take out a loan to assist in the purchase of a property it must be declared on the mortgage application. Providing that the monthly loan and mortgage payments meet with the lender's affordability criteria then theer is not a problem. I have known clients to take out a loan to increase their deposit so that they will get a 75% deal as opposed to an 80% one. The monthly payments on the 75% mortgage show a reduction that exceeds the loan repayments.

I cannot see where ther is anything illegal in this even if you take out a loan for say a car purchase and simply change your mind on the basis that a house purchase has taken priority. Further, most lenders can see the logic of taking out a loan that might cost £150 per month to make a saving of £200 by having a lower LTV deal. The loan is usually repayable over a shorter time than the mortgage term.

If your income meets the affordability criteria then there is absolutely no problem.

Hope that this helps.