Can you take out a loan to fund a deposit?

carameline

I'm hoping that in a few months time my husband can be named on our mortgage. It's just in my name at the moment so a joint mortgage would mean we could borrow more money and possibly move.

However if our house sold and the little equity we have funds only the fees, could we take out a loan to fund the deposit? It would be max 15k.

holly_hobby

Well in principal of course you could .... but the issue with a lender will be twofold ...

Firstly, the loan commitment will obv impact on your affordability assessment and any credit scoring (esp if you already have existing credit that won't be redeemed on completion).

and

Secondly, some lenders may not be too happy with a wholly loan funded deposit (and the source is routinely asked as a matter of course), as may infer the applicant has little financial discipline (ie - no initiation/desire to save). And as no personal capital has been injected there may be a higher risk of default (as essentially the mge has been financed with 100% borrowing), and we know how tight the availalbility is on them, often requiring a family gte involvement, given the higher risk of possession when affordability gets tough. Which may of course not be an accurate reflection in this case, and could essentially be seen as more of a moral/character evaluation, than a person specfic risk assessment.

I may therefore inclined to wait until you have gathered the additional savings to fund your deposit (in addition to any free equity realsied on sale of yoru property ).

There may of course be differing views .... and others will be along with comment.

Hope this helps

Holly

japmis

are the certain things that you MUST pay with cash? things that won't accept a credit card? e.g. stamp duty?

somethingcorporate

Most of it needs to be paid in cash, as it is all added to your solicitors bill.

Have you considered a super balance transfer card? This is a way of getting cash from a credit card.

carameline

I've never heard of one of those sc, what is it?

kingstreet

The number of new threads started by the OP is starting to confuse the issues. It's worth a search of the OP's previous threads to check you understand the situation.

carameline

sorry kingstreet.

I'm just trying to form a plan for the next year as things will change when my husband can be added to the mortgage.

holly_hobby

kingstreet wrote: »

The number of new threads started by the OP is starting to confuse the issues. It's worth a search of the OP's previous threads to check you understand the situation.

Thanks Kings, having now read the other 2 threads I can see the picture.

OP, my view having read your other threads which has given more background, is that you just have to sit tight where you are until you have more equity.

Yes it may be a squeeze having decided to expand your family in what you think is a small property, but with only 18 mths under your belt, you're unlikely to get consent to let from the Shared Owner, and in any event you need the capital from it to fund moving fees, so you're very much between a rock and hard place I'm afraid - which is unfortunate but a fact I feel.

Hope this helps.

Holly

carameline

Thankyou for replying Holly.

I think my original post was quite unclear actually. I actually did a shared equity scheme NOT shared owndership - 80/20%. I own the house but this means that when we sell, we owe Miller homes 20% of what we sell the house for. We bought for 150K, for eg if we sell for 140K we'd owe them 28k.

I plan on heavily overpaying so that the mortgage with Hailfax by the end of the year will stand at approx 100k. What I'm wondering is if we could add my husband to the mortgage so we can borrow a bit more, could we then possibly take out a loan if we haven't quite got enough to cover a 10% deposit on a 150k house plus fees.

I know it would be better to overpay for longer and gain more equity, its just if it would be doable I would like to try as with 3 little kids we really are on top of each other.

holly_hobby

I see, scrub mr SO ref

Re a loan for deposit - my thoughts are in my initial reply.

Hope this helps

H

EMac_2

Don't know about other brokers but I have access to a mortgage and loan combination product which allows existing home owners to borrow 100% of the purchase price of a new property. This is not an easy product to qualify for credit score and affordability wise and the loan element is expensive and wouldnt suit everyone but it can help those trapped in an existing mortgage. I'd say see a broker nearer the time but its a sign things are maybe improving a bit. Best of luck