Loan for 5% deposit on mortgage???

ladymacbeth_uk

Hi,
Please can anyone help?
OK, myself & partner are currently applying for a mortgage, problem is we no longer have 5% deposit (we were supposed to be borrowing of family) now we need to take out a loan for the 5%.
We still haven't received our mortgage offer (hopefully will know next week) When should we apply for the loan? Now or should we wait to ensure the mortgage offer goes through?
I'm worried that the mortgage company won't give us a mortgage if they discover we have a loan out & worried that loan company won't give us a loan if they discover we have a mortgage!!! We are 100% sure we can comfortably repay both debts!!! But they may not see it that way.
What should we do???

Will.Power_2

I suspect everyone is 100% sure they can afford the loan when they take it out, but that doesn't stop lots of people getting into difficulties.
Your mortgage lender may be quite happy that you're borrowing the deposit, if the loan still fits their criteria after taking account of the loan payments.
Whether either will know about the other without you telling them depends on which credit bureau each uses to search you. If they don't use the same one, the search won't show.
I'd suggest the loan company is less likely to be concerned.
Have you considered a 100% mortgage? While the interest rate might be higher on the mortgage, it'll probably be less than a loan, and you'll have lower total payments each month.

regularsaver1

You need to be very careful when taking a loan for your mortgage deposit as this monthly commitment will reduce how much you can borrow on your mortgage - as it is a reduction of your disposable income

you have to be honest where the deposit has come from too

some loan companies will not allow the funds to be used for this perpose, so you need to check

some lenders do offer 100% mortgages . speak to your mortgage adviser

MascaraMinx

Who is your mortgage with? Northern Rock do a Together mortgage which allows you to borrow up to £30k as part of a mortgage package. Beware though, it bumps up the interest rate (currently 6.19% I think)

ladymacbeth_uk

Thank you all for your comments and views. Mortgage is with NatWest & has been 'going through' for 5 weeks now, as there have been other issues along the way ( mortgage rate offered 4.89). I could get a 100% mortgage from HSBC my current bank, however this would be based on a higher rate (probably closer to 6) as I have not 'booked this rate.
We are supposed to be moving in in 3 weeks!!!!!!! That's why I don't want to change mortgage providers so close to the wire.
Anyway I've applid for a loan with Northern Rock - fingers crossed.....

AMILLIONDOLLARS

Do you own a car, or have anything that can be sold to raise the deposit? That would be a better option for you at this point. If you have not got a deposit, how are you going to pay for the stamp duty and solicitors fees that will become due at the end of the process?

johnofhertford

If you're taking out a loan to pay the deposit then that loan will be in effect when you complete the mortgage, so I think you'd be obliged to inform your mortgage lender (when you completed the application form there would have been a question about any existing borrowing and the T&Cs probably require you to inform the lender of any change to circumstances prior to completion).

If your position takes a downturn and you tried to pull one over on the bank then I wouldn't want to be in your shoes!

Your solicitor, who I assume is also representing the lender, would be a bit interested too - I'm surprised they haven't enquired where your deposit is coming from - won't you need it at exchange of contracts? If your deposit isn't coming from sale of property then they should be checking this with you in the interests of the lender.

Maybe you should be thinking of a 100% mortgage. Obviously this will limit your choice of lenders, and does expose you to some risk, but probably not as much as taking a personal loan. A 100% mortgage would work out cheaper than a personal loan as well.

ladymacbeth_uk

Hi guys, thanks for your comments.
Amilliondollars - I have £5000 saved for the stamp duty & fees & other bits and bobs - in fact should all only come to about 4k. So I have 1k to us. I guess I could sell my car but not really sure what's its worth - I usually only use it for grocery shopping and it would be easier to buy groceries online really wouldn't it.

Amillion.. & John..Got a loan for the deposit in place - phew. But still waiting to hear about mortage - should be soon though.
I guess to be honest I don't want to inform my mortgage lender about the loan in case it affects my case. I know I can afford to pay both, that's why I don't feel like I'm doing anything wrong and I'm supposed to be moving in soon & don't want to submit a new application and have to start all over again. Ooh I sound very dodgy don't I... Just can't wait any longer for all this to go through (

kenshaz

Millions have done what you are doing,as long as you have not made any false declarations ,and you have budgeted,sleep tight and enjoy your future

jonesMUFCforever

Not only does it sound dodgy but it might be construed as fraud.

nicecarkeys

your mortgage app would have asked the question source of deposit? any change in the app details before completion should be declared. The lenders may do a final credit check before the funds are sent.