Taking out a loan for a deposit on a house?

Coatsy

Currently I have about 5% deposit saved but I need to have 15% for the self cert mortage I need.

Would it be a bad idea to take out a loan to reach the 15% deposit I need?

If I was to continue to save I'd have the full 15% deposit in 5 - 6 months but my main concern is how fast prices are rising in my area. Northern Ireland has hit a major boom in 06, prices have gone up 25% this year on average and are predicted to have a similar price increase in 07.

So my main concern is that if I wait and save up the 15%, in 5 - 6 months time house prices will have increased by at least another 10% so I won't have enought saved.

I'm on a good wage so the monthly repayments is not the problem (Factoring in a loan + mortgage repayments) Getting the deposit a.s.a.p is the concern for me

Bit of a catch 22

Your thoughts?

anniecave

worth looking at mortgages that don't need 15% deposit, only the 5% ? I don't know what your circs are obviously but if you can afford both mortgage and loan repayments then mortgage providers might be willing to lend you 95% ?

jonesMUFCforever

You may find that you will have to declare the loan on your mortgage application.
The o/s loan amount might then be deducted from what they will be wiling to lend you.
In other words you might not be any better off but be stuck paying a higher interest loan.

Coatsy

anniecave wrote:

worth looking at mortgages that don't need 15% deposit, only the 5% ? I don't know what your circs are obviously but if you can afford both mortgage and loan repayments then mortgage providers might be willing to lend you 95% ?

I'm self employed, getting a self certified mortage is the only viable option I have. I could get a mortgage with 10% down but 15% deposit means I can get more competitive rates.

ejones999 wrote:

You may find that you will have to declare the loan on your mortgage application.

The o/s loan amount might then be deducted from what they will be wiling to lend you.

In other words you might not be any better off but be stuck paying a higher interest loan.

I hadn't though of that, I'll certainly look into that.

lilmisschick

possibly going for a new build - the builders will give you 5% deposit towards your mortgage and therefore leaving another 5% to find?? we done that and got on the ladder quickly, hth.

Xbigman

A loan for 10% of the value of a house is going to be quite big in its own right. You might find if you apply for a large loan and say its for a house deposit you will get turned down because they don't like that reason. It would also be an unsecured personal loan and the rates might be unattractive compared to a mortgage. If you take a loan out at an extra 2% on 10% of the mortgage thats the equivelent of another 0.2% on the whole loan.

You should check out a whole of market broker and see what they say. There may be alternatives.
Regards


X

nomoneytoday

I borrowed my first deposit off a low rate credit card.
It helped make my first year in the house hard financially-wise.

regularsaver1

I agree with ejones - the mortgage lender will most likely look at the monthly payment you pay to the loan - don't hide it - they will be able to see it

and how does it stretch you further having to pay mortgage and loan on top of all other bills ?

also you state the reason you want to give a 15% deposit rather than a 5% deposit was so that you can get a better mortgage rate - like others have also said - your unsecured loan rate is likely to be higher - so would this be the same as the 5% anyway?

us,thecat&thedebt

just to note i have just had my mortgage offer from spml (self cert)
one of the conditions is that they deposit isnt supplied by further borrowing.