Reputable loan companies

QueenBurnham

Hi all,
I wonder if any of you guys and gals could advise me?

Me and my hubby are looking to move from our 1 bed flat to a house (yippee!). After valuation, it appears that the £125,500 that we paid for the flat in 2004 is not quite what it's worth currently due to economic blah blah, and so we've been advised that we could let it out on a 'let to buy' basis.

What this means for us is that we don't now have a deposit for a house (as we'd been hoping that the equity we would have after 7 years would be enough - but no) BUT we do have an Agreement In Principle for the mortgage and will have to scout around for a loan to make up the deposit.

The plan is to take a loan (approx £25,000) over the longest period we can, and then pay it off in the middle of 2013 anyway when I get made redundant from work (planned closure of company) and so saving us years of interest.

What I'm hoping that someone can help me with is which loan companies to avoid.
I believe that Ocean Finance are not particularly reputable, just from what I've read online - although they do appear to offer the terms that suit. I've been looking through some of the comparison websites and they mention companies such as Fluent Money, Platinum Loans and Nemo.

Can anyone tell me if they've had any experiences with any of these companies? It's such a large amount that I'm nervous in case we make a wrong turn!

Thanks for reading and sorry it's so long (I did cut it down quite a bit too)

QB

Apples2

Doesn't sound like a good plan, not many lenders will allow you to use a Loan to make up for a deposit shortfall. You are essentially requesting a 100% Mortgage, which have been pretty much eliminated.

I'll quote this bit linked from another similar question

Furthermore, as the deposit you put down is borrowed cash, you yourself will have very little equity in the house and will be in danger of falling into negative equity, if house prices fall.
Even if you decided this risk was worth taking, there are two crucial problems you will face if you attempt to take out a loan to fund your mortgage deposit:

1. When taking out a loan, you will have to state its purpose. It’s very unlikely that you will be able to find a loan provider that will approve you for a loan to fund a mortgage deposit.
2. When taking out a mortgage, you will usually have to state the source of your deposit. It’s unlikely that any mortgage lender will approve you for a mortgage if the source of your deposit is a loan. Even if you don’t have to state the source of your deposit, mortgage lenders conduct extensive affordability assessments these days, and if you are already making large loan repayments each month, this will count against you.

Add to that the fact that you won't have a LET Income until you move out so your current commitments will also go against you.

The Agreeement in Principle is still some way off an acceptance.

CLAPTON

who advised you to take out a let to buy and who advised that borrowing 25k was a good idea
was the advisor a broker or the mortgage company direct?

chalkie99

Have you got a mortgage on your existing flat?

If so, have you got permission from the mortgage company to let it out and have you factored in all the other expenses such as periods without tenants, repairs when the property gets trashed, etc., etc.

Head over to the House Buying, Renting & Selling section and spend some reading time there.

Also, as mentioned already, you generally cannot use a loan as a deposit. it defeats the purpose of requesting a deposit and once the mortgage company see it appear on your credit file they will probably withdraw their offer.

antrobus

QueenBurnham wrote: »

BUT we do have an Agreement In Principle for the mortgage and will have to scout around for a loan to make up the deposit.

The plan is to take a loan (approx £25,000) over the longest period we can, and then pay it off in the middle of 2013 anyway when I get made redundant from work (planned closure of company) and so saving us years of interest.

What?

I'm just perplexed. I can't understand why anybody would want to do this, let alone think that they could do this. I'd guess that the 'Agreement In Principle for the mortgage' would very rapidly become a 'No', once the lender discovers that you have, a) just taken on a £25k loan, and b) are going to be made redundant.

LovelyLeeds

QueenBurnham wrote: »

The plan is to take a loan (approx £25,000) over the longest period we can, and then pay it off in the middle of 2013 anyway when I get made redundant from work (planned closure of company) and so saving us years of interest.

This does not bode well at all. Deal with absolutes not maybes.
I know this isn't answering your questions, but your post is flagging up so many klaxon alerts, stay put in your flat till 2013 - you'll have the 'expected' £25,000 to completely re-jig your plans, in a far more favourable way.

27col

I think that my attitude would be, "show me the money" first, before I started making any complicated plans.