Should we take out a loan to pay the deposit on a house?

opinions4u

You have two issues.

1) I'm not aware of an unsecured lender allowing "house deposit" as an acceptable purpose of loan. To provide an alternative reason (lie) would be fraud.

2) the vast majority of mortgage lenders will not accept "loan" as an acceptable form of deposit.

Thrugelmir

Lynn240 wrote: »

No it was a £100 reservation fee and it is £1000 towards the deposit then have until beginning of june to put down the rest. They are doing it this way to give us a bit of time to come up with the deposit.

Who is the developer?

Lynn240

opinions4u wrote: »

You have two issues.

1) I'm not aware of an unsecured lender allowing "house deposit" as an acceptable purpose of loan. To provide an alternative reason (lie) would be fraud.

2) the vast majority of mortgage lenders will not accept "loan" as an acceptable form of deposit.[/Q


I dont have to tell the bank what i want it for and the mortgage will have been complete by then surely.

Thrugelmir

Lynn240 wrote: »

I dont have to tell the bank what i want it for and the mortgage will have been complete by then surely.

Lenders perform audit checks on mortgage application post exchange and pre completion. The higher the risk the more likely a further credit check will be performed..

If there's a historic reason for not having much in the way of savings. You may struggle to obtain a mortgage upon full application. Once a full credit check is made.

mrginge

Lying on a credit application is generally considered to be a bad idea. Still, if you're so desperate that you're prepared to take that risk then you go for it.

However, please consider what you will do if you exchange and the lender pulls your mortgage before completion.

Lynn240

mrginge wrote: »

Lying on a credit application is generally considered to be a bad idea. Still, if you're so desperate that you're prepared to take that risk then you go for it.

However, please consider what you will do if you exchange and the lender pulls your mortgage before completion.

Does the mortgage have to be complete and approved before you exchange contracts

zzzLazyDaisy

Lynn240 wrote: »

Does the mortgage have to be complete and approved before you exchange contracts

That's a joke, right?

Let's look at it a different way.... say the mortgage does not have to be 'complete and approved' before you exchange contracts. So you exchange and enter into a legally binding agreement to pay hundreds of thousands of pounds to the seller. After exchange you find that the lender refuses to give you a mortgage. You are now legally bound to pay a huge amount of money that you don't have, and the lender won't give you.

Maybe you should stick to renting.

Lynn240

zzzLazyDaisy wrote: »

That's a joke, right?

Let's look at it a different way.... say the mortgage does not have to be 'complete and approved' before you exchange contracts. So you exchange and enter into a legally binding agreement to pay hundreds of thousands of pounds to the seller. After exchange you find that the lender refuses to give you a mortgage. You are now legally bound to pay a huge amount of money that you don't have, and the lender won't give you.

Maybe you should stick to renting.

Yes so what im saying is its going to be complete and approved then we exchange contracts then we can get a loan for 4 grand then how will the mortgage lender know about it? God its not like fraud or anything i might need that loan for a new car who is to say its for the deposit??

zzzLazyDaisy

Lynn240 wrote: »

we exchange contracts then we can get a loan for 4 grand then how will the mortgage lender know about it? God its not like fraud or anything i might need that loan for a new car who is to say its for the deposit??

Your problem is that under the money laundering regulations your solicitor (who is acting for both you and the lender) must ascertain where the deposit has come from. If it has just landed in your account, then the solicitor must ask you for evidence of where it has come from. If it is a loan, this will reduce your affordability and is likely to result in your lender reducing the loan it is willing to provide.

The lender can pull the plug on the loan at any time until completion, leaving you with a legally binding contract to buy the house, and no mortgage.

Lynn240

zzzLazyDaisy wrote: »

Your problem is that under the money laundering regulations your solicitor (who is acting for both you and the lender) must ascertain where the deposit has come from. If it has just landed in your account, then the solicitor must ask you for evidence of where it has come from. If it is a loan, this will reduce your affordability and is likely to result in your lender reducing the loan it is willing to provide.

The lender can pull the plug on the loan at any time until completion, leaving you with a legally binding contract to buy the house, and no mortgage.

Thank you, thats what i was looking for. Suppose then if my partner got a loan and put it in my bank would it still come up that he has took out a loan.