Is this possible?

darrendonald2

Question:

Is it possible to get a personal loan (from anywhere) that does not show up on my credit report so that I can use the personal loan as a mortgage deposit?

I don't want banks to see that I have a loan when I apply for a mortgage or they will not give me a mortgage.

Here's the facts ...

For about eight years I have invested in property. I purchase in town centres so that rental yields are high and (most importantly) I experience very little void periods. The big stumbling block in growing a port-folio is the 20% deposit needed for a BTL mortgage.

This is frustrating because I know that rental yields can easily cover mortgage repayments AND a personal loan, but banks simply won't lend to you if you use a personal loan for your 20% mortgage deposit.

It does work:

I recently bought a £110,000 property and borrowed £88,000 from the bank. I needed to put in 20% (£22,000) which I did so with my own money. Suppose I got a personal loan from HSBC for £22,000, the (actual figures) would look like this;

INCOME

• £1000/month - Rental income I am currently receiving

OUTGOING

• £340/month - Repayments on the mortgage (fixed for 4 years)
• £529.41/month - personal loan repayments spread over 4 years

PROFIT

• £130.59/month (without using my own money)

The only trouble is, if you have an existing personal loan you can not get another mortgage. When you apply for a mortgage, the bank will see that you have a loan on your credit report.

So, the only way to get around this, as far as I know, is to borrow from friends. Banks won't see this. I have asked my friends (who don't plan on buying a property) to take out a loan for £15,000 and give it to me. I would then pay their loan off via direct debit plus an extra £1000 as a thank you. No one wants to do it though

So, back to the question. Is it possible to get a loan (from anywhere) that does not show up on my credit report so that I can use the loan as my mortgage deposit?

chickaroonee

no, you must already know that?

[Deleted User]

This will not work. You are required to declare the origin of your deposit, you're required to show proof of the origin of the deposit and lying is mortgage fraud, which can (and does) get mortgages terminated, which means losing your home and the deposit, putting you on the hook for the full loan without any assets. They won't lend to you without a deposit that you've built up yourself because it shows a lack of financial responsibility, it shows a lack of investment in the purchase, if you can't save £10k (or have the family that can provide you with it) how are you expected to cope with the maintenance of a property. Try and use your current equity as a deposit, maybe?

ognum

OP you know there is a reason that you are not supposed to become over your head in debts and loans!

I care not if you do this to yourself but if you are over leveraged you put your tenants at risk of losing their homes. think about them before y ou do this, if your buisness model was working so well you wouldn't need this money.

BitterAndTwisted

"PROFIT: £130.59/month (without using my own money)"

This is a business-plan that's going to lead you to only one place: financial disaster

patman99

OP when calculating your 'profit' you seem to have forgotten about deducting Tax, NI & all the costs of safety certificates & insurance.

If you renting for £1000 p/m & your mortgage is £340, this leaves you £660 before insurance and safety cert. costs, so take off say, £30 p/m month for ins. & £50 p/m for the certs, that leaves you £580. Do you use a letting Agent ?. If so, that will be another fee to come off
What is left is (if you are s/e and not a Limited Company) subject to the usual 20% Tax + NI.

zzzLazyDaisy

OP I know you are a newbie and probably not aware of the rules, but posting duplicate threads on the same subject is not permitted.

https://forums.moneysavingexpert.com/discussion/4678375

I suggest you ask a board guide to merge the threads.

morgan78_2

me and my friend brought a property last year to rent out, with a 25% deposit 12 months later we remortgaged and took money out to enable us to buy another one, might be an option

sulphate

No, like criticsquid said you are required to show where your deposit has come from and any bank or even solicitor would probably become suspicious of £15k being deposited in your account seemingly from nowhere.

darrendonald2

citricsquid wrote: »

This will not work. You are required to declare the origin of your deposit, you're required to show proof of the origin of the deposit and lying is mortgage fraud, which can (and does) get mortgages terminated, which means losing your home and the deposit, putting you on the hook for the full loan without any assets. They won't lend to you without a deposit that you've built up yourself because it shows a lack of financial responsibility, it shows a lack of investment in the purchase, if you can't save £10k (or have the family that can provide you with it) how are you expected to cope with the maintenance of a property. Try and use your current equity as a deposit, maybe?

Thanks for your comment. Can't use equity as banks are down valuing so much. I might try that again in a few months. Crazy though because that is in itself a loan (albeit on a mortgage).

darrendonald2

chickaroonee wrote: »

no, you must already know that?

Yes. But I am also aware that there may be something (legal) that I don't know. I think money "saving" forum is probably the wrong forum for this question though!