Loan for a deposit!???????

spurs_nut

Need some advice form you mortgage brokers.

I'm thinking about taking out a £10000 loan with northern rock over 10 years for a deposit on a house.

Now the repayment of £153 will be my only debt other than the mortgage.

What I want to know is whether mortgage lenders frown on using personal loans as a deposit.

What I also want to know is whether after three years when I come to switch mortgage, how easy would it be to incorporate the loan into the mortgage? Like consolidate it into one monthly payment.

We have a joint income of 28000 and estimating the monthly mortgage payment of £550

peterg1965

I did exactly what you describe when i moved into my current house 5 years ago. Admitedly the market was slightly different but I had to borrow £25,000 over 10 years (with Northern Rock) as the 10% deposit for my house. This was because I had made virtually no money on my previous house but my salary could support a much larger mortgage. Nationwide, my new Mortgage provider did not count this against me, I did, obviously, declare the loan in my mortgage application. Five years down the road my current house has nearly doubled in value and the loan is now part of the mortgage. Good luck to you and hope you get what you want.

spurs_nut

peterg1965 wrote:

I did exactly what you describe when i moved into my current house 5 years ago. Admitedly the market was slightly different but I had to borrow £25,000 over 10 years (with Northern Rock) as the 10% deposit for my house. This was because I had made virtually no money on my previous house but my salary could support a much larger mortgage. Nationwide, my new Mortgage provider did not count this against me, I did, obviously, declare the loan in my mortgage application. Five years down the road my current house has nearly doubled in value and the loan is now part of the mortgage. Good luck to you and hope you get what you want.

Thanks for that, sounds quite promising :beer: :j

Just hope I get accepted for the loan.

Got a good credit rating and have never missed a payment on outstanding debt so fingers crossed

Are northern rock good to deal with?

peterg1965

Agree Northern Rock are quite efficient. As an example of how a personal loan makes a difference to how much you can borrow on a mortgage, put your details into the Nationwide (or other lender) mortgage calculator and see what it comes up with.

toonfish

generally they will just deduct the annual repayments on the loan from your salary before appling income multiples. You need to work out if this route is cheaper than a 100% mortgage overall.

danjberry

and dont forget it might not be as easy as it was for Peter to consolidate the loan into the mortgage as the market is not booming like it was. imagine if it house prices started falling considerably then you could already be in begative equity without even taking the loan into consideration.

Some lenders will also not allow this anyway as they would consider it a 100% mortgage if they knew that was what the loan was for, and not every lender does 100%

Mr_helpful

Couldnt you get £10000 on a credit card with 0% interest? or even a 100% mortgage just as easily?