Add bank loan to deposit for better LTV

marc-h_2

This has to be a stupid idea, however it seems to work. We currently have a mortgage that has 2 years left at a fixed rate. If we bought a new more expensive house, ported the mortgage and took out a loan to increase the deposit we could go from 85-90% LTV to 75% LTV and wouldn't need to increase our mortgage but would be in a better position for a new mortgage in 2 years time. The cost of servicing the loan over 4 years would be less than the savings from the better deals available when we re-mortgage after 2 years. Plus the bank should still be happy that our current mortgage plus the loan repayments are manageable as they are willing to give us a much bigger mortgage than we currently have.

I can't see me ending up doing this because it sounds risky but in theory would it work? Hopefully I explained correctly.

Son_of_a_beesting

Bank loans will not be accepted as a deposit I am afraid.

_Andy_

As stated, no mortgage lender will accept a loan as a deposit. Additionally I don't know of any loan providers that will loan for that purpose anyway.

TBeckett100

but they dont have to know do they. HSBC will give you a decision and put the money in your account within 5 mins of turning the PC on.

however the floor in the plan is "what if " in 2 years on the mortgage deal front.

VIGILANT22

TBeckett100 wrote: »

but they dont have to know do they. HSBC will give you a decision and put the money in your account within 5 mins of turning the PC on.

however the floor in the plan is "what if " in 2 years on the mortgage deal front.

Do you mean not disclose it and then it shows up on the credit report when they run their final check before releasing the funds for the purchase!....mortgage refused and in breach of contract!

oh why do people think they can out smart everything!

marc-h_2

I kind of guessed they wouldn't accept is as part of the deposit. What about if you had spent all the loan money and someone had given you an equal amount as a gift. You would still have the loan repayments to make and the same deposit. I am suggesting that as a genuine if unlikely scenario not suggesting you should lie to the bank.

Annisele

marc-h wrote: »

I kind of guessed they wouldn't accept is as part of the deposit. What about if you had spent all the loan money and someone had given you an equal amount as a gift. You would still have the loan repayments to make and the same deposit. I am suggesting that as a genuine if unlikely scenario not suggesting you should lie to the bank.

In that case, you could have chosen to use the gift to repay the loan, but you didn't - so in the lender's eyes you've borrowed the deposit.

What lenders will accept in a few years isn't necessarily the same as what they will accept now - but I hope we've got many years to go before 125% mortgages are handed out again!

marc-h_2

I think my best bet maybe to port the current mortgage and get a short term deal to top-up to the required amount. I should be able to bring down the LTV substantially over the first few years and be in the position to get a better deal then. Not sure how it will work out with product fees though, could be quite expensive.

This all ignores the likely changes to house value over that time and type of deals on offer.

VIGILANT22

Your first challenge is getting them to agree to port...for some reason clients think this happens upon request...however it is down to current criteria

marc-h_2

VIGILANT22 wrote: »

Your first challenge is getting them to agree to port...for some reason clients think this happens upon request...however it is down to current criteria

My current mortgage is 90% LTV is that not the only criteria I would need to meet on a new property?

VIGILANT22

marc-h wrote: »

My current mortgage is 90% LTV is that not the only criteria I would need to meet on a new property?

Are you increasing borrowing?...Porting is treated as a new application