Mortgage with a loan for the deposit

jljlg102

Hello Everyone

I was hoping I could get some advice on the below situation?

I have been giving conflicting information in regards to the above. I have spoken to Natwest and Lloyds and both have said that if I had the Loan from another bank then it would not affect the mortgage application as long as we were ok with affordability.

In terms of affordability they did a check based on our income and with the loan included and they said they would lend us 122K we are only looking to lend 77kish on a 90% LTV. So this should be fine.

I have spoken to a solicitor who has said that they wouldn't have a problem with the deposit being form a loan as long as the bank are ok with this. My question is basically if we got the loan and then applied for the mortgage would we be declined:

A, because the solicitor would go back to the bank and tell them the deposit was a loan

B, Because the bank would do a credit check and they would see we had just taken a loan for a little over the deposit and take it as we had taken the loan to cover the deposit

I am a just a bit concerned as the mortgage advisor I originally spoke to about this advised the Loan as a deposit may be a problem, but since the banks have said it wouldn't.

It is quite frustrating at the minute as a renter in this market as paying high rent which would be more than the mortgage and the loan together.

New to the house buying world so all advice is very much welcomed.

Thanks for you help

James

Dave_Ham

There are 2 answers here James.

So long as you are honest with the lender and both are affordable, most lenders will not have a huge issue with this.

Whether it would be good "advice" to do this is another question...

You need to consider the potential costs of home ownership and you will get some brilliant advice on here.

Good luck

MagicCats

Dave Ham always gives top advice

I guess the concern lenders will have is possibly not affordability, as you may clearly be able to afford it, but the ability to save and be financially stable.

jljlg102

Thanks Dave Ham and Magic cats!

Suppose I will have to clarify with the banks and see how far we get. Its a shame that renting and Saving at the same time is virtually impossible!

Caz3121

jljlg102 wrote: »

Thanks Dave Ham and Magic cats!

Suppose I will have to clarify with the banks and see how far we get. Its a shame that renting and Saving at the same time is virtually impossible!

How will the Mortgage monthly payment + loan monthly repayment compare with what you currently pay on rent?

Thrugelmir

jljlg102 wrote: »

It is quite frustrating at the minute as a renter in this market as paying high rent which would be more than the mortgage and the loan together.

Ownership comes with additional costs. So renting is more expensive as its "all inclusive".

jljlg102

The Rent I am currently paying is 625 and the Mortgage over 30 years is 410 plus the loan, which would be over 5 years would be 210. Obviously there would be the additional costs of various insurances, and general maintenance of the house but even with this included affordability would not be an issue.

Thrugelmir

jljlg102 wrote: »

The Rent I am currently paying is 625 and the Mortgage over 30 years is 410

Thirty years is a long mortgage term. Interest rates are currently historically low. So don't base your assumptions on this being the case for 30 years. As quickly as interest rates fell they could rise again.

jljlg102

Hi Thrugelmir

Thanks for the advice. The mortgage we are looking at is fixed for 5 years with natwest which means we would have the loan payed off which would give us 210 as a safety buffer for the inevitable rate increase that will occur as we wouldn't be paying th loan after 5 years.

ACG

Sounds like you have thought it all out (kind of), im not sure taking out a £10k loan one day then applying for a mortgage the next would go down too well.

As dave says this will probably work as affordability wise you would be walking it.

But applying for a loan, giving it to your mum and her giving it you back would look well dodgy - dont forget no matter where you get the loan from, its going to show on your credit file (this is where the kind of part comes into play)...so trying to be clever and hiding it is pointless.

I imagine if you took the loan out, waited for 3-6 months or so then it might be ok. I think you would be best going via a broker though as im not sure all lenders would accept it - but i could be wrong.

martinsurrey

a possible get around could be for you to ask a relative to take out the loan in thier name and 'gift' it to you.

you then meet all the repayments to them.

a sort of bank of Mum and Dad, but with an interest rate.