Mortgage and Deposit question

NASA_2

I'm a potential first time buyer, going to view a house today, but just looking a little advice about deposit or lack of it (Currently).

I've already spoken to the Halifax (I bank with them so spoke to them to see what they offer) and they say they are prepared to give me a Mortgage of up to £89,220 which, frankly, is more than I need and more than I could afford. The house I am going for is listed at £64,950 but the estate agent has said that the seller is eager to sell and that a deal could be done for less than that amount. Which is great (As long as I like what I see today).

I am also due to get a lump sum settlement from work of almost £14,000, this will be paid within the next few months, but no definite date has been given as yet. All of which leads me on to my question regarding the deposit.

I will have to pay a deposit of around £6,000. My current 'savings' will be around £3,200 by the months end (Just before I get paid again). Can I take out a small loan to cover the deposit? If so are there companies that specialise in these short term loans and dont charge excessive interest?

It really would only be for a few months until the settlement payment is made and it would be a shame to miss out on what looks like a good investment due to having to wait a few months.

Thanks.

_Andy_

No mortgage company will accept a personal loan as a deposit.
Could family help as a short term measure?

Cannon_Fodder

What is the settlement for ? Redundancy/injury..? Won't you need it ?

If you cannot save 10% under your own steam, you may struggle to afford the running costs of a property.

A loan would be spotted during the credit checks. Lenders do not like borrowed sources of deposit.

Prices in some regions are still dropping, so I wouldn't necessarily rush to buy.

NASA_2

_Andy_ wrote: »

No mortgage company will accept a personal loan as a deposit.
Could family help as a short term measure?

Family cant help in the short or long-term in all reality.

Cannon_Fodder wrote: »

What is the settlement for ? Redundancy/injury..? Won't you need it ?

If you cannot save 10% under your own steam, you may struggle to afford the running costs of a property.

A loan would be spotted during the credit checks. Lenders do not like borrowed sources of deposit.

Prices in some regions are still dropping, so I wouldn't necessarily rush to buy.

The settlement is an equal pay settlement rather than compensation for anything 'bad'.

I do recognise that if I cant save then that would tend to indicate that I cant afford running costs. My wage has taken a significant increase in the last few months - I'm talking a jump of nearly £5k a year - so where budgets were tight just a few months ago I have no the opportunity to use that extra money to pay a mortgage. I already pay £300 from living at home so the jump to a mortgage isnt huge though I recognise that I will have to take on elictricity costs etc. in addition to mortgage.

As for credit checks, my record is spotless, never a payment missed since I first got a credit card ten years ago. Wouldnt they be prepared to accept that it is purely a stop-gap loan and that a couple of months down the line I would be able to repay it in full and more?

House prices in Northern Ireland never went up as quickly (In most areas) as they did in England and Wales and they arent falling as quickly either. They seem to be static.

I know it doesnt make sense to rush things but I missed out on a house a number of years ago, quite similar to the one I am looking at now, and it only cost £24,000 at the time. Its nothing like that price anymore (Its gone up quite a bit). That could be affecting my judgement on this.

Person_one

I'd wait until you actually have the money in the bank. Its only a few months and that will give you time to look around a few places, keep a close eye on rightmove and land registry sold prices and get a good feel for the state of the market in your area.

You can also use this time to research and monitor mortgage deals becoming available and may spot a better rate before you come to buy.

Most lenders want to see that the deposit is your own money from savings and won't accept a loan. They'd also take any loan repayments into account on the affordability tests so even if you were planning to pay it off in full when you get your lump sum, they wouldn't just trust you on that and would view your application as though you were making the monthly payments every month for however many years.

NASA_2

Ok, thanks for that.

Just one last thought - I have some money in the Credit Union which I could lend against - as far as I am aware they dont make any refence to credit agencies and lend solely on your record with them and on what you wish to use the money for.
They arent regulated in the same manner that banks are and work with you should you ever come across any problems but, as I say, that wouldnt be a factor for the short term loan. If that's no good I guess I will have to accept that I cant do anything yet.

Raggs_2

Assuming you don't have debts to settle, and no other pressing business, you may be better off using more of that money towards your deposit. It will allow you access to much better mortgage deals, at the moment you seem to be going for 10%, but have the possibility of getting upto 25%. Could save you a lot of money in the long run.

Cannon_Fodder

NI prices never rose quickly, nor fell quickly....??? Not entirely convinced you have researched NI house price movements;

"..and it only cost £24,000 at the time. Its nothing like that price anymore.." - why has it gone up so much if there was little price inflation in NI ?

From http://rpp.ulster.ac.uk/housing-archive.php

2nd Quarter 2007;

Annual % increase
Market Sector Change
Terraced house 54.6%
Semi-detached house 62.6%
Detached house 46.3%
Semi-detached bungalow 47.6%
Detached bungalow 47.0%
Apartment 34.5%

3rd Quarter 2009;

Annual % change
Market sector Change
Terraced/townhouse -24.2%
Semi-detached house -15.8%
Detached house -11.0%
Semi-detached bungalow -25.3%
Detached bungalow -20.2%
Apartment -36.2%

http://rpp.ulster.ac.uk/research/housing-index/q1-2010.pdf

Have a look at the graph on Page 10, which shows the up/down nature of the crash in NI.

Q1 2010 figures show stabilisation, but are on such low volumes as to be unreliable at present. More sales are needed to see whether this is a definite trend.

NASA_2

Cannon fodder - I said compared to England - did they not go up quicker and fall quicker there?

Cannon_Fodder

England never had a 50% per annum increase, at any time...

NASA_2

Well, my mistake, but it wasnt really what I was concerned about anyway.

FWIW, I've put a tentative offer into the owner of the house at a price below the asking price, having thought about it I should have the money in place before it comes to the point of having to pay it.

At each point I will consider whether it is still worth going forward if I dont have the money in the account.

The house is everything I need. If I make a balls of it I'll have to deal with that.