using loan for deposit.

barcareal

I have considered this. Back on subject about using a loan any mortgage brokers with any experience of this?

DVardysShadow

It is on topic to mention that repairs are the Landlord's responsibility. The repairs and maintenance will typically eat up all of your notional £70/month saving. So you will need extra funds to pay off a loan for a deposit.

barcareal

opinions4u wrote: »

I am not aware of any lender that will offer a mortgage where the source of deposit is a personal loan.

To lie about the source of deposit would be act of fraud.

Santander do, aswell as 3 other lenders that a broker told me about...

The purpose of the loan also said for property deposit.

Anyone done this with any of these companies?
I know many people will of done this "backdoor 100% mortgage"

barcareal

DVardysShadow wrote: »

It is on topic to mention that repairs are the Landlord's responsibility. The repairs and maintenance will typically eat up all of your notional £70/month saving. So you will need extra funds to pay off a loan for a deposit.

How much a month do you spend on repairs?
The whole thing is a joke really, it should all be focused on affordability not the size of deposit. If idiots wouldnt of put the market in this position, many of the idiots are landlords I wouldnt be in the rent no savings cycle. It appears no matter what you do you get stuck in a rut.

Leon_W

There are only a couple of lenders that will take a loan as a deposit, but it is perfectly possible. You'll need one hell of a credit rating for it to get through though ! In my experience, of the few applications I've had on this basis, most are rejected.

regards

rndb

I wasn't aware that you had to declare the source of the deposit when applying for deposit? Surely anyway, if the remainding 7500 is in your bank account/ instant access saving then saying that will suffice, without declaring it came from personal loan in first place.

I don't particuarly see why you can't use the remainding 7500 towards deposit. Yes it is in effect taking out a 100% mortgage but if you've worked out affordability (incl interest rate rises) etc then why not, and it gets you out of renting.

I don't quite see why everyone diverges from question being asked....

opinions4u

barcareal wrote: »

The purpose of the loan also said for property deposit.

Which lender gave you an unsecured loan for "property deposit"?

Did you check they had keyed the purpose of loan in to their systems correctly?

There is no law against it, it's just an extraordinarily high risk type of lending for both the unsecured loan company and the mortgage lender.

From a mortgage underwriting point of view, a loan from parents will in most cases be considered favourably. But a loan from somewhere else? - it just reeks of no commitment to the property or the mortgage if something goes wrong.

rndb wrote: »

I wasn't aware that you had to declare the source of the deposit when applying for deposit?

Most lenders will ask a question about the source of deposit.

Surely anyway, if the remainding 7500 is in your bank account/ instant access saving then saying that will suffice, without declaring it came from personal loan in first place.

To hold back information that is material to acceptance for the mortgage is bordering on mortgage fraud. If you hold back the information when you've been asked the question, it is mortgage fraud. If you say "it's in my savings account" and then mysteriously have a loan for a similar sum taken out a few months earlier it will stand out like a sore thumb to any decent underwriter.

I don't particuarly see why you can't use the remainding 7500 towards deposit. Yes it is in effect taking out a 100% mortgage but if you've worked out affordability (incl interest rate rises) etc then why not, and it gets you out of renting.

People who don't put their own money in to a property are more likely to cease paying and walk away. It's a statistical fact. That's why lenders want bigger deposits than they used to. If it's your parents' money you're more likely to find a way to pay your mortgage than if it's a Barclays car loan for a non-existant Ford Focus where you are far less likely to give a stuff when the going gets tough.

I don't quite see why everyone diverges from question being asked....

Because it's the interweb and these things happen.

DVardysShadow

barcareal wrote: »

How much a month do you spend on repairs?
The whole thing is a joke really, it should all be focused on affordability not the size of deposit. If idiots wouldnt of put the market in this position, many of the idiots are landlords I wouldnt be in the rent no savings cycle. It appears no matter what you do you get stuck in a rut.

I'll leave you to guess how much I spend on repairs and general upkeep, but I have left some big clues in this thread.

As for focussing on affordability rather than deposit, do you understand 'negative equity'? The deposit is the cushion against negative equity which allows you to sell the property when the price falls below what you bought it for. When the price falls below what you have borrowed, you can't sell, you can't move, you are stuck.

Finally, I am amused that you rant on about idiots. We are in this mess because banks [staffed by idiots] lent money to idiots who borrowed for a deposit and did not have deposits big enough to start with.

WellKnownSid

barcareal wrote: »

How much a month do you spend on repairs?
The whole thing is a joke really, it should all be focused on affordability not the size of deposit. If idiots wouldnt of put the market in this position, many of the idiots are landlords I wouldnt be in the rent no savings cycle. It appears no matter what you do you get stuck in a rut.

Just stay around the forum a while. You'll notice 90% of the people in deep mortgage do-do are people who took out 100-125% (eg Northern Rock) mortgages. These are not landlords... but normal home buyers.

As DVardysShadow accurately points out, these people and their lenders are the reason the market is as it is today. At least the market now realises that you cannot AFFORD a house if you cannot AFFORD the deposit.

Home ownership brings with it many more responsibilities, as does a mortgage. Far better to be wishing you had a mortgage, than actually having a mortgage but wishing you hadn't, as many on here do!

gerry_mc

There is no problem with having the loan as a deposit. The loan is in fact now savings that you hold. So if they ask it is coming from your savings. When I worked for a Bank we didnt ask where it was coming from just how much was there.

The repairs thing is a bit ott as well. I have had one burst pipe in my whole time in my house (admittedly only 6 years). That only happened when I decided to get a new boiler (this was through choice as opposed to necessity). So I wouldnt be thinking you would have to spend £70 pm on repairs. If you did then I wouldnt bother buying the house.

Interest rates will rise, thats a given. When and how fast though is up for debate. The 15% did happen, but for how long? They could go to 100% or higher!! As long as you are savy enough to know that you will have to find a bit of extra money when they do rise if you were on a variable or discount you are sorted. I seen you are going for a fixed anyway so that negates the argument a bit.

Go for it matey and give it a go as long as you feel you can afford it. The Loan will be taken off as a commitment so as long as you fall within the affordability criteria you will be cool.