95% mortgage workaround

moneygum

Hi

I'm not sure what I'm asking here, maybe after some thoughts / advice.

I'm looking for a £200k mortagage for my second home, 95% preferably as I will only have £10k to use as deposit from my existing house sale. I've been looking around but can't find any, so did research here etc and they do exist but for existing customers of certain banks... I'm with Northern Rock, (yuk) and they won't offer any more money, not surprising!

So...

I was thinking I would get a £10k personal loan and use that as a deposit, it's a way around the problem I guess. What's your thoughts on this? To put this into perspective, the slight risk taking here is the difference between me living in a 2 bed flat for the next 4 years or a nice house this year.

Is anyone in this position currently or has taken a personal loan for a deposit?

The frustrating thing is that me and my partner could easily afford the repayments of a £250k mortgage, let alone £200k! But we just can't raise the 10k, would take years to save that money.

beecher2

You're not allowed to use a loan as a deposit. If you can easily afford payments of 250k, surely you could raise 10k in under 4 years? Go onto the debt free wannabee forums for help in cutting your household expenses and make it your target to save as much is possible.

Cannon_Fodder

You have to state source of deposit. No Lender will like a loan as half the deposit.

If you can afford a £50k bigger mortgage "easily", then you should be able to save £10k in less than 3 years, easily.

moneygum

beecher2 wrote: »

You're not allowed to use a loan as a deposit.

Not allowed by law or frowned upon?

Surely it doesn't matter what I spend the money on as long as it's getting repaid...

robin_banks

Do we get still get these threads ?.

Are people that thick that they think they get a loan and use it as a deposit ?

herbiesjp

You would not get a loan where the purpose of the loan is for funding a deposit.

You need to disclose where the deposit is coming from - and stating anything other than loan would be fraud.


Do you have parents/family that could gift you the extra funds? Just looking at legal ways of getting the extra funds.

moneygum

robin_banks wrote: »

Do we get still get these threads ?.

Are people that thick that they think they get a loan and use it as a deposit ?

:rotfl:Why am I thick for looking at ways to bend the rules to secure myself a nice home...?

Cannon_Fodder

Its frowned upon. The Lenders want the buyer to carry some of the responsiblity/risk of prices falling, so they do not over-extend themselves.

If Lenders let loans be used for deposits, like in your case an extra 5% to top up your own 5% to 10%, then there would pretty soon be buyers borrowing the full 10% deposit, no cash of their own, and Lenders carrying the other 90%.

It only doesn't matter what you spend the money on, if it is YOUR money. This is THEIR money, so the Lender can put in place any conditions it considers appropriate.

You could always take out 10 x £20k personal loans, at 9.9%+...as you can afford high monthly outgoings, just not the immediate cash lump.

robin_banks

moneygum wrote: »

:rotfl:Why am I thick for looking at ways to bend the rules to secure myself a nice home...?

Because to put it simply you don't have a deposit.

You have more debt.

Debt is not wealth.

moneygum

Ok, so from a legal standpoint... If I got a £10k loan from a bank and said it was for a car and used that as a deposit on a house from another bank, this is fraud?

Cannon_Fodder

You know it is.