Taking out a loan for mortgage deposit

mortgagemonkey

Hi,

Quite simply i am struggling to get onto the housing market due to a lack of a down deposit.

I am 31 y/o, partner is also the same. We both have had houses previously with previous partners and both went through a messy sell at about the same time.

Before people wade in with accusations we had been both single for over a year before we met but due to the housing market at the time the houses did not sell so were stuck.

Since then we have both rented primarily as we have not wanted to own again since. We did not make any money out of the houses due to a slump in the housing market at the time.

We have been saving for a few months now and saved/collected £16k.

We have recently have got engaged and now that we have commitment we would like to buy.

Quite simply we are 16k short of the down deposit that we require for a 10% mortgage on a £319,950 house.

I earn 77k basic but propped up by a an options package which is taken as majority cash (still have a pension etc) and a 4% bonus each year (not guaranteed), the missus earns 32k basic with no guaranteed bonus).

I have no debt beyond a hire purchase agreement on a car which is £586 a month.

I am tempted to take a loan out of £716 (or cheaper if i shop around) a month for two years to ensure we can buy the house that we want quicker.

The mortgage is affordable every month, the loan is affordable, the HP for the car is affordable and still means i am able to put away £500 for savings each month and still have money available.

I am unable to borrow money off parents or friends etc. already looked at this option.

Can someone advise if i am being stupid in taking this loan out? I understand i need to show that i am able to pay this loan back for at least a few months is this the case to show a good credit? Is it worth waiting until January for the government down deposit scheme?

I feel we are in a bit of a rut and stuck in the limbo of renting.

Thanks M

opinions4u

1. If you tell the unsecured lender the loan is for house deposit they will decline you.

2. If you tell the mortgage lender you borrowed to fund the deposit they will decline you.

Failure to tell the truth to either party would be fraud.

So keep saving.

[Deleted User]

I am not an expert, but I don't think banks take a loan as a deposit anymore.

ACG

Why dont you apply for a 95% mortgage?
Your credit reports will need to be squeaky clean but there are a couple on the market.

Alternatively, is renting a cheap property for 6 months an option?

Thrugelmir

With a basic gross income of £109k per annum shouldn't be an issue for you to save the money for the deposit if you put your minds to the task in hand.

Borrowing the deposit will be viewed negatively. Not least because the lender can see your attitude towards personal financial management.

ValHaller

mortgagemonkey wrote: »

We have been saving for a few months now and saved/collected £16k.

We have recently have got engaged and now that we have commitment we would like to buy.

Quite simply we are 16k short of the down deposit that we require for a 10% mortgage on a £319,950 house.

I earn 77k basic but propped up by a an options package which is taken as majority cash (still have a pension etc) and a 4% bonus each year (not guaranteed), the missus earns 32k basic with no guaranteed bonus).

Saved 16k in a few months? Save for a few more months then.

People who are desperate come on here asking if they can take a loan for a deposit. On 109k, really you are not desperate.

_Andy_

Been done to death on this forum

No mortgage lender will accept a personal loan as a deposit.
No personal loan provider is going to lend for that purpose.

Back to the drawing board

Dan-Dan

Borrow money , to enable you to borrow more money ?

not the best idea you`ve probably ever had

chanz4

scale the house size down

mortgagemonkey

Thank you all for replying - i guess my naivety of the mortgage market has not helped.

Will look into 95% mortgages again and re-evaluate the situation - the house has come up in an area that we would really like to live in.

John424

I only had 5% deposit and borrowed another 5% (£17k) years ago to take advantage of a lower rate. We had a joint income of £90k or so but had just got married so didnt have ready funds but we knew we would rapidly pay off the loan which we 'stoozed' off zero rate cards etc at a rate lower than the mortgage! We paid it off easy in a year, details hazy now, but was just a cashflow timing issue that's all. I'd dive in if I were you, you'll be in 'your' house earlier and your salaries are totally adequate. House prices taking off round here again because of FLS! In fact, 6 years on with LTV approaching 60% I'd say we're more broke now with kids in childcare :-(