Loan to top up deposit - will only end badly?

Cleosmum

Going for a 95% mortgage through a broker, he couldn't get a DIP and that it had been referred. He said this was probably due to my husband being a UK resident but not a UK national. Today we've been told that he won't hear back regarding the referred decision and we just need to apply for the mortgage. We've got everything we need apart from a p60 as it's still not been issued.

Now, I think our stumbling block will be a recent loan taken out. The loan was to repay what's left of an old but up to date loan but we asked for extra so that we could top up our deposit. I know it's a daft thing to do but I need to do all I can to secure the house I want. Is it going to go against us or will an actual human look at it, calculate it all and see that we can afford it? Do they look into the origin of the deposit that closely? (I'm guessing yes based on having to give details if it was a gift!)

Please be gentle, I tried to Google it but got nothing, just want some idea of how things will go, not bought since 1997 :-/

FireWyrm

I thought the rules were that you couldnt use a loan for part or all of a deposit? The deposit has to be clear funds in your account and not from a loan in any part. Some banks even balk at the idea of a loan from family forming part of a deposit, it has to be a gift and the person giving that gift has to renounce all legal claim to the money for it to work. I think what you did might have been a bad decision and might lead to problems when an underwriter looks closely at it.

You might struggle with a 95% mortgage anyway and if you have to get a loan for some of the deposit, doubly so.

Wozza85

Not sure how well this will go down to be honest.

If they credit check you after you get the loan it will flag up and then they may lend you even less or not at all.

We had a letter to say our Deposit would be gifted but in reality the money is coming from us now as we saved enough before the mortgage starts.

Wh05apk

There are no "rules" saying you can't do this, and if it is affordable then lender should not have too much of an issue, have they asked for confirmation of where the deposit is from?

Cleosmum

We've only been asked for 'proof of deposit' which I took to mean show it sitting in the bank rather than show us where it came from.

We've got an appointment next week to do the application and today we settled the above old and up to date loan.

Wozza85

Cleosmum wrote: »

We've only been asked for 'proof of deposit' which I took to mean show it sitting in the bank rather than show us where it came from.

We've got an appointment next week to do the application and today we settled the above old and up to date loan.

So i am guessing you plan to tell them you're getting the loan to help with deposit? If they want to see proof of deposit at the same time you do application then you would have to tell them there and then that you have a current loan....but if you did it after full application then theres a chance they wont know about the loan.

Wh05apk

If they see a lump sum being paid into your account, they may ask where it came from.

Wozza85

edited original post...n/m

Cleosmum

Without proof of deposit it wouldn't have gone to full application so couldn't really apply after. The money is in the bank and I'd have to be upfront and tell them, it'll be on the credit files anyhow :-)

Wozza85

Cleosmum wrote: »

Without proof of deposit it wouldn't have gone to full application so couldn't really apply after. The money is in the bank and I'd have to be upfront and tell them, it'll be on the credit files anyhow :-)

Yeah sorry I didn't fully read your opening comments. So you already have the loan, I guess it's just up to the bank now! Hope it all goes through for you.