Using loans for deposits

garvbuck

Thanks Thrugelmir,

Mulling it over I think renting is best. We can rent for a lot cheaper than our current mortgage. It's just sad that it means we'll not only have to get off the property ladder, but be paying off a loan too (to cover the ERCs we'd then incur, plus any negative equity). It just feels like we tried to get on the property ladder too young, thinking that this was what you are supposed to do. Now we're ready to settle down, we've got education/stable career/good incomes, none of which our parents had at our age, and we're financially in a worse position than they were. I guess we just have to suck it up.

FireFox - I wasn't saying I would lie, I was saying that getting a loan from my parents (which the lender has said would be fine) and paying them back from a loan I get later (which the lender also said was fine, and which we can 100% afford) might be an option. As I stated before, the overall move would bring our existing debt, including mortgage, down. It's not a question of affordability, it's a question of whether or not there is a solution to making it happen.

If I already had an unsecured loan and had already spent it on home improvements, I would be allowed a mortgage with my current lender. When I'm in the new house, I would be allowed this loan. It's purely a matter of timing, which is why I was asking on here if there were any creative solutions to the problem.

garvbuck

Thanks morph,

That might be an option - I just don't think we want to ask them to do that. I think we'll just knock it on the head. Sell the house, pay the ERCs, rent, pay back the debts, and start again. We got on the property ladder at 22, now we're 27 and in a worse position than when we started. I guess it's just hard to let go, even when you know it's the right thing.

garvbuck

Oh dear, have reverted to my old identity.

Will go back to cashorcheque now. Whoops.

cashorcheque

Me again. Sorry - am now on work computer, not home computer.

Fire_Fox

garvbuck wrote: »

Thanks morph,

That might be an option - I just don't think we want to ask them to do that. I think we'll just knock it on the head. Sell the house, pay the ERCs, rent, pay back the debts, and start again. We got on the property ladder at 22, now we're 27 and in a worse position than when we started. I guess it's just hard to let go, even when you know it's the right thing.

Consider that you have recently found this website - everything you could ever want to know about moneysaving is here, plus a ton of stuff you had probably never considered! :money: This is the budget planner most often used, complete in full and then attack every figure one by one - nothing should be out of bounds:
http://www.makesenseofcards.com/soacalc.html

Why have you got two usernames?

Thrugelmir

garvbuck wrote: »

Thanks morph,

That might be an option - I just don't think we want to ask them to do that. I think we'll just knock it on the head. Sell the house, pay the ERCs, rent, pay back the debts, and start again. We got on the property ladder at 22, now we're 27 and in a worse position than when we started. I guess it's just hard to let go, even when you know it's the right thing.

You've learnt a lesson, nothing to be ashamed of. Hopefully this will put you in good stead for the future.

silvercar

I wasn't saying I would lie, I was saying that getting a loan from my parents (which the lender has said would be fine) and paying them back from a loan I get later (which the lender also said was fine, and which we can 100% afford) might be an option. As I stated before, the overall move would bring our existing debt, including mortgage, down. It's not a question of affordability, it's a question of whether or not there is a solution to making it happen.

That is what I would do.

A lot of lenders will pay you back your ERCs if you take out another mortgage with them within 6 months of the redemption of the first. Chains collapsing often lead to sale and purchase not happening on the same day, hence the grace period to buy again.

silvercar

If I already had an unsecured loan and had already spent it on home improvements, I would be allowed a mortgage with my current lender. When I'm in the new house, I would be allowed this loan. It's purely a matter of timing, which is why I was asking on here if there were any creative solutions to the problem.

Any reason why you can't take that unsecured loan out now. Then you would have the money in your account for a couple of months before your sale happened. That would mean you are paying the deposit from money you already have, the loan repayments would be declared on your mortgage application and everything would be above board.

cashorcheque

No, except for the fact that we went yesterday to get a mortgage agreed in principle and obviously didn't have a loan to declare. I'm just worried that if we go back to the bank now and say 'actually we've just got a £15k loan' they won't be happy. Not sure how to go about it.

silvercar

cashorcheque wrote: »

No, except for the fact that we went yesterday to get a mortgage agreed in principle and obviously didn't have a loan to declare. I'm just worried that if we go back to the bank now and say 'actually we've just got a £15k loan' they won't be happy. Not sure how to go about it.

Agreements in principle are not worth anything; as people on here have found out.

When you make the true application that is when you are asking for the money and that is when they will take into account all your outgoings. If you think loan payments could mean that the lender will judge that you can't afford the mortgage then a loan isn't the way forward. If affordability won't be an issue for the lender then an unsecured loan is the way forward.

I would ignore all the "you can't do this..." that people say. The only people whose opinion is valid are your solicitor and your lender; ignore the rest. I would inquire on a "no name" basis initially. Ask your lender the effect of having an unsecured loan of £XX at the time of application and its likely effect on an application.

Part of the mortgage we took on our new home funded the deposit on the other place we bought at the same time. The lender wasn't interested. As far as they were concerned we wanted a loan of X on a property worth Y and what we did with the money was irrelevent. I had got ready all the "savings from Y will be the deposit and we want X to have a safety net and some to reimburse someone for fees for buying....." and they weren't interested in anything. Bottom line was salary multiples, loan to value, credit rating and affordability.