Short term loan whilst applying for mortgage

xxedrushxx

Hello all

I have a slightly strange situation that requires some genius ideas\thinking. Well, I am currently in the process of purchasing a new build flat. I originally have a 10% deposit, but after speaking to an independant financial advisor, he strongly recommends building my deposit to 15% for better interest rate and better padding for possible remortgage in a few years. Well all good, except the extra amount I would need to make up would be £7k. I've worked out that I could muster £4-5k in the next month (non borrowing btw), which would leave me about £3k short. Now by coincidence I have £3k tied up in a property i'm renting (deposit + arrears), but this tenancy agreement doesnt finish until a month after the proposed completion of the new property. Unfortunately, I cannot delay potential purchase date.

So, esentially I would need a £3k loan for about 6 weeks, that I know I would be able to pay straight back once the equity in the rental was released.

My ideas so far are:

• Short term loan from the bank, but would this intefere with my mortage application or if I put my mortage application through and then applied for personal loan during, would this be rejected or seen as fraudulent in some way? (by the way i have impecable credit, so under normal circumstances a £3k loan wouldnt be an issue for the bank)
• Pawn my car or jewellery: Although I did some brief research and noticed that APR can run into triple figures for car pawning, whilst I'm not so sure how jewellery pawning in charged
• Pay my solicitors and others on credit card: But again, not sure if thats allowed and whether it would intefere down the line with a mortgage application, not to mention, saving me only about £1.5k

Any suggestions \ advice greatly appreciated

Tixy

Yes a loan would likely interfere with your mortgage application. Getting new credit after the mortgage application and before you complete is a big no no, it can mean your mortgage offer is withdrawn. Some people have even been stuck after exchange of contracts and before completion leaving them in really big trouble.

Pawning your car - ie things like logbooks loans are a really bad idea, and again could go on your credit file - any option to sell the car and buy a cheap runaround or buy another at some point in the future?
Not sure about jewellery.

Credit card, if a new card or limit increase then would be the same as the loan. If an existing card could still cause a lender to withdrawn their offer.

Just so you are aware a mortgage lender will search your credit file again just before you complete. They'll also usually often ask where the deposit has come from and even ask for proof.

silo24

Can only state what I did about 7 years ago when I bought my first house.

I was in very much the same situation as you, being a significant sum short after complications with a mortgage application. Basically they said they'd take my wife's salary into account but as she'd ben in the job 4 months, not the 6 they wanted, we were 12k short.

What I did was get the mortgage offer sorted and approved and applied for a loan approximately a week before we were due to complete. I didn't do this with my bank and I stated it was for home improvements...

Bear in mind though this was in the days when credit was EASY to get...you need to make a judgement on whether your credit record is good enough to take a similar risk. As Tixy says, they will re-check...

Another tack to take is tell the house builder you are going to be £3k short and what would they like to do about it? There may well be some scope for them to give you a £3k discount, meet you half way or re-contract so a final payment is due a few months after you move in....

xxedrushxx

Thanks to you both for your advice. I think I will avoid borrowing then as I dont want to risk the mortgage being rejected. Although, I thought £3k would be such a small amount as to not arouse major suspicion. I was hoping there was some type of service that could loan money for short periods of time for a reasonable interest.