FTB - Advice please

palasmy

Hello

We are preparing for our first house buy and doing the best possible effort come up with as much deposit as we could. I have een offered a Money transfer for £4500 for a 4% fee, interest fee for a year. My question is, if I accept the Money transfer and add that to my existing deposit pot, will that reflect as a negative on my record when I go for the mortgage? We thought by doing this we could have a better LTV.

We have worked out our maths, considering a monthy pay out to settle this MT in a year's time, we should still be in a reasonable position to pay our monthly mortgage dues based on the house estimate and income we have. The larger deposit in principle should lighten our monthly dues anyways, am I thinking right here, please help?


Thanks

ACG

You cant use a loan for a deposit on a mortgage.

Also if the money transfer is from a credit card, double check it is interest free. Most only do 0% for purchases/balance transfers.

palasmy

Yes, the MT is based on my current balance in the credit card and it is interest free for a year but a handling fee of 4% is charged.

I was of the opinion that only loans can't be used for mortgage but this is only a short term arrangment and will it not be accounted for already when I disclose my credit card balances? and moreover this will be transfered into my current account so how does the bank know here it came from anyway (excuse me if I'm being senseless)

Thrugelmir

palasmy wrote: »

and moreover this will be transfered into my current account so how does the bank know here it came from anyway (excuse me if I'm being senseless)

Lenders perform spot credit checks prior to completion (releasing the mortgage funds) to see if there has been activity since the original enquiry to process the transaction.

palasmy

As I said it is only a part of my existing credit card balance so can it not be considered as a credit that is already present in my profile. It is not like I'm applying for a fresh loan to come up with my deposit, moreover it is only a supplement to my decent deposit pot that I already have.

Our intention is to get a good LTV but if this route is complex then maybe we should consider bringing some money from our overseas savings which would mean that we will have compare the local interest rate against the money we might potentially loose due to exchange rate conversions..

Would really appreciate if some one with similar situations can share their experiences...

Thanks

kingstreet

Lenders and solicitors routinely ask for evidence of deposit during the homebuying process. A payment into your account will doubtless be queried as part of the anti-money laundering regime and the source will then come to light.

Dave_Ham

Not trying to put you off ways of advancing your situation, just trying to establish it is fraught with risks.

On your credit report today it will show as an example your credit card limit of £8k with £1k as this month balance and £800 last month, £750 for the month before as an example.

This is a rolling credit report and if checked tomorrow and it shows £5k this will be a different credit score for you and also limit your affordability.

At application stage a bank will typically allow 5% of a credit card balance into your monthly expenditure, although obviously this figure changes as the balance does.

If you are well within the afforability model this will not show as new credit and even if checked unlikely to cause you an issue.

If you are tight, this could be the straw that breaks...

Additionally, if this is some sort of cash advance it is like an alarm bell on your credit report - similar to taking cash out of an atm on a credit card...

All the best

palasmy

Thanks Dave, that is a valuable piece of advice I think I now understand the risk involved. I will have to start to work on my overseas savings such that I can bring it into UK. Will there be a tax issue for such money when brought in from overseas? can some one familiar with this explain me what would be the best way forward for this?

Thrugelmir

There's no issue with bringing money into the country.

If you've failed to declare income previously to the UK tax authorities that's a different issue.