Mortgage deposit

weehev

im looking to move house soon however i do not have enough of a deposit saved up. what are people's views on taking out a loan for this?

it will take me years to save up enough for the deposit

thanks

bexy87x

I'm new to all this myself, so only going on what I've read, but taking out a loan to pay a deposit will look bad when you try to get a mortgage. It says that you don't have the funds and/or will power to save up for the deposit and therefore it may be the same when it comes to mortgage payments. Like I said, I'm new to all this, but I think others will say the same :-)

CloudCuckooLand

Spot on, bexy.

Annisele

It doesn't really matter what people think, it matters what lenders think - and unfortunately lenders aren't at all keen on the idea at the moment.

If you need to move house, would it be an option to sell your current property and rent for a while?

If you don't need to move, then the best thing to do is probably to save (either by overpaying your mortgage or by putting money in a savings account).

weehev

yeah i can see why it would look bad. iv had my current mortgage for 3yrs with no missed payments. i also borrowed way less than i could of and so far have saved approx £8,000. i could afford to save £200 a month, which in loan payments would allow me £10,000. however to save £200 a month means years of saving.

if only the 100% mortgages still existed!!!

:mad:

Sandrock

Why the hurry? Look at where you're spending money and cut down where you can, putting the extra money with the £200 a month you can afford to save. In no time you'll have built up a reasonable sum to use as a deposit.

LittleMissAspie

Can't you use your equity as the deposit? I thought that was how it worked as a second time buyer.

weehev

LittleMissAspie wrote: »

Can't you use your equity as the deposit? I thought that was how it worked as a second time buyer.

yeah it used too, but unfortunately due to the drop in house prices il only make a few grand, not enough for a deposit.

DVardysShadow

weehev wrote: »

yeah it used too, but unfortunately due to the drop in house prices il only make a few grand, not enough for a deposit.

That is exactly why you need a deposit. The fact that you had a deposit means that you are still in positive equity and you do at least have freedom to sell. But what the lenders will see is that you are now vulnerable to negative equity if there are further falls.

The way it works is that all your cash is put at risk before any of the lender's money. So your only way forward is to save. Depending on your mortgage rate and T&Cs, overpaying may be your best route.