Would a mortgage application fail if funded by a loan?

Thrugelmir

sugarbabe84 wrote: »

I'm currently paying off a loan which was £8185. I only have around 2k left to pay. I also have 1k credit card bill that I'm paying off monthly.


Is it possible to execute this?

Stick with your repayment plan. Once the debt is cleared you'll be able to start saving. Will be worth the effort in the long term.

sugarbabe84

holly_hobby wrote: »

I tend to agree with O4U, your new loan will effectively be restructuring existing finance, and sourcing your deposit.

From an UW point of view, the issues are that your purchase will effectively be 100% financed (ie mge & loan acting as deposit) - with no personal input of your own, which could equate to a more flippant attitude to maintaining the debt, given that you won't essentially be losing any of your own capital should it sell for less than the original valuation, to which coupled with a shared ownership property (ie more difficult market to sell in) we have a heck of a risk profile on the case.

Additionally, the financial commitment resulting from the loan will impact on the max loan available (which may or not be detrimental if its actually lower than the combined commitment of your 2 existing arrangements).

Personally, I would save my deposit rather than borrow it.

Hope this helps

Holly x

My current loan has an APR of 9.9. The HSBC one would have an APR of 5.1. I estimate that I will be able to pay £500 into my credit card bill next month, bringing it down to £500. Then another £500 in March, essentially covering my credit card debt and just leaving the loan. I can only do this because I just moved to a much cheaper property (which is really rough . and have also managed to clean a graduate £500 overdraft that I had a month ago so I no longer need to worry about that one.

Back in 2004 I had a loan with HSBC which I paid very well. Which is why I'm hoping I get one again.

When my parents bought their first house, they part funded with a loan but this was 13 years ago. Maybe things are different now though.

I'm hoping if I got a loan now, I would put it in my HSBC savings account then kick start the housing mortgage application in march.

holly_hobby

The problem isn't wholly that there's a loan involved in funding some of the deposit, its the fact that its funding 100% of the deposit, effectively giving you 100% lending - and the issue being the risk factor that goes with it (I've explained why above).

Whilst UWs as long as I've ever been involved in mortgages, have always taken this view, as O4U has confirmed from his own personal experience as an UW with 1 of the largest lenders in the market.

Listen, we can only give you guidance, the proof is in pudding, and you seem determined to go this route - so spend an hour with a whole of market broker, ensure that its declared to the lender at application stage (ie before any fees are incurred) that the deposit is being entirely funded by a personal loan, and take it from there.

Wish you well ...

Hope this helps

Holly

sugarbabe84

holly_hobby wrote: »

The problem isn't wholly that there's a loan involved in funding some of the deposit, its the fact that its funding 100% of the deposit, effectively giving you 100% lending - and the issue being the risk factor that goes with it (I've explained why above).

Whilst UWs as long as I've ever been involved in mortgages, have always taken this view, as O4U has confirmed from his own personal experience as an UW with 1 of the largest lenders in the market.

Listen, we can only give you guidance, the proof is in pudding, and you seem determined to go this route - so spend an hour with a whole of market broker, ensure that its declared to the lender at application stage (ie before any fees are incurred) that the deposit is being entirely funded by a personal loan, and take it from there.

Wish you well ...

Hope this helps

Holly

Thanks for your advice. I'm expecting a bonus in Feb, so will it make a difference if I put approximately £1500 into my saving account between now and the time I hope to do the application in March? Bearing in mind my deposit would only be £3500

holly_hobby

Any funds of you own in the deposit mix will help swing the decision .... and demonstrate that you have some financial prudence in being able to save.

Of course the affordability assessment will inc your payment profile (which is A1 is great), and any exisiting commitments that will continue post completion ....

Hope this helps .. there's always help here if you need it, although sometimes we can't always say what peeps would like to hear ! ;-)

Wish you well ...

H xx

sugarbabe84

holly_hobby wrote: »

Any funds of you own in the deposit mix will help swing the decision .... and demonstrate that you have some financial prudence in being able to save.

Of course the affordability assessment will inc your payment profile (which is A1 is great), and any exisiting commitments that will continue post completion ....

Hope this helps .. there's always help here if you need it, although sometimes we can't always say what peeps would like to hear ! ;-)

Wish you well ...

H xx

Great, thanks. I'll start putting money in my savings account. So far I've been focused on closing my graduate overdraft and paying the loan, I sometimes put surplus money in the loan account, but I guess I should focus on putting the surplus in the savings account. I'm pleased I no longer have to focus on covering the graduate overdraft.

Yorkie1

Will you have sufficient funds to pay for mortgage application, survey fees, legal costs, stamp duty (if applicable) on top?

sugarbabe84

Yorkie1 wrote: »

Will you have sufficient funds to pay for mortgage application, survey fees, legal costs, stamp duty (if applicable) on top?

The loan is intended to cover part deposit and all the costs you mentioned above. I did mention in my original post that I want to use 3500 to cover the cost of buying.

Yorkie1

Ah, yes, so you did - missed it the second time round.

kingstreet

So what's the purchase price of your 25%?

What's the rent on the unowned 75%?

What's the monthly loan payment?

As an example, if you earn £23k, with £200 rent and £200 loan, the most the best-known SO lender will give is £61,268 over 30 years.

Often SO is more about affordability as the rent is treated as an expense, as is your other credit.