Loan for Deposit Question?

jimbo2010

I was speaking to one of our men on site today about mortgages and us saving for a deposit and how it is a struggle due to renting etc and he told me that when he bought his house 2.5 years ago they took out a loan for the deposit and then left the money in the bank for over a year and then applied for a mortgage with another lender and he didn't have any problems as the loan was taken out over a year ago before the mortgage.

Is this a risky idea and i will prob get shot down for this

HappyMJ

jimbo2010 wrote: »

I was speaking to one of our men on site today about mortgages and us saving for a deposit and how it is a struggle due to renting etc and he told me that when he bought his house 2.5 years ago they took out a loan for the deposit and then left the money in the bank for over a year and then applied for a mortgage with another lender and he didn't have any problems as the loan was taken out over a year ago before the mortgage.

Is this a risky idea and i will prob get shot down for this

Not a particularly good idea but if you wish to do it that way then go ahead. The loan payments you make will reduce your affordability and reduce the amount you can borrow. It's not risky at all as they only go back over your statements for a few months. Try and get the lowest rate you can and put the money into the highest interest earning account you can find and it won't cost you too much. £15,000 borrowed over 5 years will cost about £300 a month and £15,000 invested at 3% should earn you about £30 a month in interest. So after 5 years you shouldn't be down by too much.

Yorkie1

Don't forget that the loan will show up on your credit record, and may affect how much the lender will be prepared to lend overall.

Also, if the timing is too close, and the sums too similar, the lender may well suss out that the loan is in fact the deposit - and ask for evidence of longer savings, or ask you to confirm in writing what the loan was for - and if you maintain that you saved the deposit then it is arguably fraud because you haven't saved that deposit yourself at all.

amnblog

It is not well known or understood but f you approach the right lender, you can find one that is comfortable with your taking out a loan for the whole of the deposit (assuming all payments are affordable).

Talk to a good mortgage broker.