Loan for house deposit - Am I being silly

M2013_2

My husband and I currently rent and we are saving for a deposit.

However we know we can get a loan from the bank that will cover our deposit for a help to buy scheme.

Alternatively, it will take us about three years to save a deposit, during that time, rent paid is dead money (£6.3k a year), so if we can afford it why not get a loan instead?


Instead of saving for 3 years we can pay off loan in three years. Is this completely stupid?? Have I got it all wrong?? Where can I get independent advice on this.


Thanks


M2013

~Beanie~

You can't use a loan as a deposit for a property. Lenders will want to know where your deposit came from and won't accept a loan.

Rent paid isn't dead money either, it's paying for a roof over your head.

Stinkybell

Seconded - you will find it exceptionally difficult to find a lender who would accept this money as your deposit; and in any case they will take this and any credit commitment into consideration and you will be offered multiples based on your salary minus the value of the loan, which may not be enough for you.

If you think renting is dead money, downsize or lodge somewhere cheaper and be prepared for a large drop in your living standard for a couple of years to meet your long term goal

princeofpounds

As the others said, these days you don't have a chance (rightly).

Plus, interest paid on a mortgage is also dead money. You rent the money instead of the property.

I'll never understand why people can't grasp that (well, ok I do, but I think it's lazy thinking)

Dan-Dan

It`s extremely lazy thinking , i have spent up to now , all my adult life renting , it suited me and my lifestyle , as i am (well , before the kids came along) very prone to change things at the drop of a hat , paying to rent someones house , worked for me , and the landlord , and how can it be wasted money ?would someone rather be loaded but live on a park bench ?

DRP

princeofpounds wrote: »

As the others said, these days you don't have a chance (rightly).

Plus, interest paid on a mortgage is also dead money. You rent the money instead of the property.

I'll never understand why people can't grasp that (well, ok I do, but I think it's lazy thinking)

The mortgage interest isn't dead money if the property increases sufficiently in value by the time you sell ....

datlex

Why not speak to your bank etc and ask them. I think some banks now work on affordability rather than mortgage multiples. e.g. if it costs you £50 a week to get to work, you can afford less than someone who pays £20 on the same salary.
As for dead money, are you buying a house for its primary purpose i.e. to live in? If so it is not dead money. Like wise a long term rent for the purpose of living in is not dead money.
The value of a house is only important at 3 times, when you buy it, when you sell it, when you take finance against it. Other than that it is meaningless.