loan for mortgage deposit?

vintagebakers

We want to buy our first house but are currently paying off some debt which is due to end early next year. We live in private rented and have two kids so haven't been able to save a deposit so i want to know if anyone has any advice?

The plan was to get a loan when our debt has been paid off for around 10k which would start when the debt has finished and would be similar in price to what we are paying now and our mortgage would be similar if not less than our rent atm.

The only thing that worries me is I don't have alot of credit history and my husband has bad credit history so has anyone got a loan with this mind and where did you gt it from?

kiki*_2

I'd be very surprised if you could get a mortgage with bad credit history and I doubt they would want you to have a loan for the deposit too!

DannyboyMidlands

So you want to borrow money in order to qualify to borrow even more money? That is never going to happen.

Why the addiction to debt?

You need to pay off the debts that you have and then start saving. With luck the mortgage market may have got better by the time you have a few grand in the bank.

vintagebakers

First of all its not my debt its my husbands from before we meet and second of all I thought it would be better to pay the debt off rather than saving a deposit cos we would still be in this situation as its taken five years to pay the debt off

Im only looking for options as neither of us has owned property before so if we have to save a deposit then that what we will have to do

DannyboyMidlands

You are quite right that paying off the debt is the best thing to do but it all becomes pointless if you then go straight out and get another £10k loan.

Unfortunately there aren't any shortcuts. You just need to clear your debts and start saving.

vintagebakers

Thats what i thought we would have to do, just didnt want to save over the next few years and then realise there was something we could of done now, ah well better start watching the pennies!

kingstreet

What will a £10k loan cost each month? £200? £250?

The equivalent of the payments will be knocked off your borrowing power, so £250 a month or £3,000 per annum knocked off your income will mean a loss of between £12,000 and £15,000 from what you can borrow from the mortgage lender.

If you have a relative with savings in a building society, you might like to have a look at what Marsden BS is doing for mortgage borrowers. Likewise, if you're in the Midlands, Tipton & Coseley has help for its members who have a relative with a property.

Frankly, I agree with the others. Save as much as you can as quickly as you can once your debt payments cease.

purplelila-2007

It doesn't sound as though lenders would be very keen to lend you a mortgage based on what you've said.

The best thing to do is pay off the debt , and start saving for a deposit. Have you considered shared ownership?

Also because you have children , depending on the lender will lend you can borrow less than a childless couple .
I came across the article below . If I was in your situation I would look at shared ownership.

http://www.thisismoney.co.uk/money/mortgageshome/article-1712247/Mortgage-giants-capping-loans-to-families.html

The_Blue_Hatter

vintagebakers wrote: »

We want to buy our first house but are currently paying off some debt which is due to end early next year. We live in private rented and have two kids so haven't been able to save a deposit so i want to know if anyone has any advice?

The plan was to get a loan when our debt has been paid off for around 10k which would start when the debt has finished and would be similar in price to what we are paying now and our mortgage would be similar if not less than our rent atm.

The only thing that worries me is I don't have alot of credit history and my husband has bad credit history so has anyone got a loan with this mind and where did you gt it from?

Sounds like it will be hard to get a mortgage depending on your OH history and how bad it is. Should you take a 10k loan this will reflect in what you can borrow and make it highly probable you wont be able to get a mortgage. You will also want to check to see if you can even get the 10k loan as all lenders are taking a much tougher stance.

What you're looking to do is possible but probably not in the way you're trying to do it. Check properly with a FA that you could get a mortgage with your 10k deposit. Then check to see if you can get a secured loan for 10k based on you being a homeowner. If this is all OK you just need a friend/family member that is happy to lend you 10k for a short period. Use this as your deposit, buy your house and then take out the loan and repay your friend/family member.

Now im sure some people on here will tell you this method is not adviseable and you should save up for the deposit, im not even going to debate that, im simply trying to show the only way I believe you can pull this off. Mortgage rates are low and if you dont think house prices will drop any further it could be a wise move but nobody really knows what house prices will do so there is certainly risk with this method.

Good luck with whatever you choose.

ic

A few years ago you would have gotten away with it - hell the likes of Northern Rock were lending people 100% mortgages and then dishing out a 10% loan on top of that. Of course that could never work and caused the collapse that we all now suffer. The real world is you need to save and have some real cash towards the house. Remember that when you have your house, you'll have maintenance costs and insurance costs you didn't have previously as a tenant.

Perhaps you should be looking to assisted purchase schemes where you own 50% or 75% of the home, and then rent the rest?