Change of employment + NR Together unsecured loan as future deposit

Keith

Hello,

Two queries, we'd like to move house if we can find a buyer. Things don't look great with 3 sales listed in the nearest 300m on nethouseprice, but if we can get near what the agents are telling us we can happily move.

Question 1.

My wife is currently on maternity leave and gets Maternity Allowance until December. She is a nanny and her employer told her that she wouldn't be able to bring her child so she has resigned whilst on maternity and found a new job starting in January.

I think it's unlikely that we'll be accepted for a new mortgage until she has been with her employer for 3-6 months? Is that right?

Question 2.

I understand that a personal loan is a no no when it comes to being used as a deposit but we have a NR Together mortgage. We are planning on redeeming the secured part and carrying on with repayments towards the unsecured section (I am aware this means that the repayment will rise). The unsecured part would then be in with the equity of our current home and be used against the purchase of the new house.

Are the rules different in this situation? I can't see anything in the CML about disclosing the source of the deposit.

Thank you,
Keith

_Andy_

2) Doesn't make sense. You've already had the funds for the loan so where is the deposit going to come from?

Thrugelmir

Keith wrote: »

Are the rules different in this situation? I can't see anything in the CML about disclosing the source of the deposit.

Solicitor may well ask on behalf of the lender.

Both the Together and new loans will appear on your credit report. So may well impact on your mortgage application.

The increase in interest cost in the Together loan is significant so well worth overpaying this to reduce the balance owed immediately.

Keith

_Andy_ wrote: »

2) Doesn't make sense. You've already had the funds for the loan so where is the deposit going to come from?

I'm thinking that technically, the person buying our house gives a 10% deposit which we use as agent towards our purchase + the extra to make it up to the 10% we require or hope that the seller is desperate and will accept 5% with the usual standard clause that 10% is due if completion doesn't take place.

Upon sale we'd have:-

Equity hopefully.
Mortgage to be repaid.
Together loan.

We'd use the together loan with the equity to purchase the new place with a new mortgage.

The plan is to refinance the together loan in 12 months when our car finance ends.

ViolaLass

I don't see how you can use your loan as equity or a deposit - presumably you've already spent that money.

Also, the deposit doesn't go to the seller. In fact, I can't see that they would care what deposit you have provided you can get a mortgage.

_Andy_

The loan has already been spent so there aren't any funds from it

Keith

The together loan paid our deposit, we have the old style 100% mortgage so that money is still "in the house". Started with 90/10 mortgage/loan. We now have 85/9/6.

The deposit is sent to the seller on exchange of contracts so we'd be using the one received to purchase.

_Andy_ wrote: »

The loan has already been spent so there aren't any funds from it

So in the eyes of the lawyer it would be 85% mortgage and 15% equity, but on my credit file I have a loan with Northern Rock?

Thrugelmir

Keith wrote: »

So in the eyes of the lawyer it would be 85% mortgage and 15% equity, but on my credit file I have a loan with Northern Rock?

Not sure where the "lawyer" comes into this situation.

A lender however will see the amount of unsecured debt you have and base their decision on whether to lend or not accordingly.

Thrugelmir

Keith wrote: »

The deposit is sent to the seller on exchange of contracts so we'd be using the one received to purchase.

So will your vendor. So if the house you are purchasing is more expensive additional funds will need to be found.

The vendors solicitor would advise against a clause as you previously mentioned.

Keith

Thrugelmir wrote: »

Not sure where the "lawyer" comes into this situation.

A lender however will see the amount of unsecured debt you have and base their decision on whether to lend or not accordingly.

Great, that answers that question. The unsecured portion is no longer in anyway linked to the property.

Thrugelmir wrote: »

So will your vendor. So if the house you are purchasing is more expensive additional funds will need to be found.

The vendors solicitor would advise against a clause as you previously mentioned.

We are selling a "starter home" which from research I can't see that we'd be able to sell anywhere near the agent figures. Only 2 sales in the area in the last 6 months, 1 was our neighbour and the house hadn't been touched since it was built in 1983 so has been gutted, I've no knowledge of the other. The trouble is the sale price next door is £14k under what we want. Other houses in the street have had boards up but haven't sold.

On the figures from the agents the difference is minimal really I'd expect £13,500 deposit on our home and we'd need £15,000 deposit to buy. We'd be able to top up if needed.

I'm starting to wonder if selling and renting for 12 months is the better option, then we'd have the correct deposit. The only problem is that we have pets and have been told by agents in the town we want to move to that the LL don't really accept cats & dogs. I'm also concerned that an increase in house prices or mortgage rates could force us back to where we are now rather than the town 6 miles north where we want to bring up our child. This would also cover the problem with the wife changing employment and allow us to remove our car finance from our credit file.