Advice needed...Getting a loan for a deposit

RedfordML

Just wanted some advice on whether getting a loan now or later is the best thing to do...

We are going to have to take a loan (£10,000) to achieve a deposit to allow us to move. We are currently saving towards the deposit. We currently save £300 a month (having saved around £4,000 already).

I can secure a loan, for £10,000, paying £200 a month, over 5 yrs so we would drop our savings to £100 and put the £10,000 loan to our savings giving us £14,000 as of now and start re-paying the loan now.

This is where I need advice; Myself and my partner can not agree on when to take the loan, as we don't actually plan to put our house on till Febraury next year.

1) Are we best getting this loan early, start the repayments now and take less debt with our move - having paid a year of the loan off already.

2) My partner is concened about taking the loan early we would be taking on a big commitment, if house prices drop further we would not need a loan as this would affect us selling, meaning we have paid interest on a loan we won't need.

Any thoughts welcomed...

evoke

Good advice: you should not get a loan for a deposit. In fact, you're not supposed to get yourself more in debt to get a deposit for another debt. LOL.

Your loan will show up on your credit report and your mortgage lender will see this. You'll also need to declare the loan during your mortgage application and this will reduce the amount you can borrow, so you will probably end up being in the same position as you now, but with having to pay off a loan that is at a higher interest rate than a mortgage!

poppysarah

Keep saving.

If you need to get a loan then you've not saved enough.

_Andy_

RedfordML wrote: »

Just wanted some advice on whether getting a loan now or later is the best thing to do...

We are going to have to take a loan (£10,000) to achieve a deposit to allow us to move. We are currently saving towards the deposit. We currently save £300 a month (having saved around £4,000 already).

I can secure a loan, for £10,000, paying £200 a month, over 5 yrs so we would drop our savings to £100 and put the £10,000 loan to our savings giving us £14,000 as of now and start re-paying the loan now.

This is where I need advice; Myself and my partner can not agree on when to take the loan, as we don't actually plan to put our house on till Febraury next year.

1) Are we best getting this loan early, start the repayments now and take less debt with our move - having paid a year of the loan off already.

2) My partner is concened about taking the loan early we would be taking on a big commitment, if house prices drop further we would not need a loan as this would affect us selling, meaning we have paid interest on a loan we won't need.

Any thoughts welcomed...

No loan provider will lend for that purpose
No mortgage provider will accept a personal loan as a suitable source of deposit.
So I'm afraid your plan is flawed anyway

SamBG911

Seems to me you are doing fantastic with the saving every month and I suggest you avoid the loan, keep on saving as you are, maybe even miss a holiday to reach your target and soon you will have your deposit loan free. Well done being so sensible with your cash

RedfordML

Thanks for all your replies, especially the lovely positive reply from Sam
We are coping with the saving, but like most people just wanting to move asap and obviously saving takes soooo long!!

Gwhiz

RedfordML wrote: »

Thanks for all your replies, especially the lovely positive reply from Sam
We are coping with the saving, but like most people just wanting to move asap and obviously saving takes soooo long!!

It's worked for generations!

_Andy_

RedfordML wrote: »

Thanks for all your replies, especially the lovely positive reply from Sam
We are coping with the saving, but like most people just wanting to move asap and obviously saving takes soooo long!!

It will be more satisfying in the long term don't worry