Source of Deposit

shy2011

Looking to buy a house but i have a concern i need some advice on -
Both me and my partner bought new cars in July so both took out car loans - my partner also replaced his motorbike and did some home improvements so he has 2 loans i have 1 taken sicne july.

Affordability and income mortgage wise is fine for what we want to borrow but im wondering when we apply for a mortgage if the lender will see the deposit as coming from loans as we will be selling the cars and bike to get the deposit but obviously wont be paying the loans off.

We didnt expect to be moving house but we have fallen for a new house and have had an offer accepted. Joint income of 58k and we are looking for a 153k mortgage pp 170k so 10% deposit.

Any help would be appreciated.

Wh05apk

Provided affordability with the news is not an issue, you will be fine, except................

................unless the lender can see there is enough equity in your existing property to cover the deposit, they will expect to see banks statements etc showing the funds already in your account, they will not accept "we will be selling.............." as they would then assume you will not, and instead boroow extra to cover the deposit.

shy2011

Thanks for your reply - we are letting the existing property out as its my partners and he doesnt want to sell as no money would be made in the current climate - however the mortgage would be self supporting. So its the money coming from the sale of the 2 cars and motorboike which we got recently which will be used as the deposit. I just dont want to think it was our intention all along to use loans as a deposit as it was completely out of the blue we have made this decision. Thanks

Thrugelmir

shy2011 wrote: »

Thanks for your reply - we are letting the existing property out as its my partners and he doesnt want to sell as no money would be made in the current climate - however the mortgage would be self supporting. So its the money coming from the sale of the 2 cars and motorboike which we got recently which will be used as the deposit. I just dont want to think it was our intention all along to use loans as a deposit as it was completely out of the blue we have made this decision. Thanks

How much debt do you outstanding in total?

Wh05apk

Thrugelmir wrote: »

How much debt do you outstanding in total?

What's the relevance of that?

Thrugelmir

Wh05apk wrote: »

What's the relevance of that?

Material fact that may affect an underwriters decision.

Wh05apk

Thrugelmir wrote: »

Material fact that may affect an underwriters decision.

Not significantly, they will base decision on affordability, which will be dependent on repayments as opposed to just total borrowing.

shy2011

Total debt is about 23k but monthly payments are affordable and with all commitments we have 1300 disposable income left per month- went to the lender on my lunch and she cant see it being an issue so i have abit more hope.

Thrugelmir

Have you approached your current lender for consent to let your existing property? Is the property in negative equity?

shy2011

Yes have got consent to let from the current lender and the property isnt in negative equity but LTV is about 95% so not far from it which is why we havnt sold.