Best way to plan deposit

Dreaming_2

I'm looking to buy a first home up to the value of £165,000, with a view to obtain 90% LTV (10% deposit) so will need maximum of £15,000 deposit. We're probably going to end up near the £125,000 mark however.

I currently have £2,500 myself, and a family member said they will gift me £10,000. They have also said they can loan me £5,000 from their company for me to pay back interest free at £500 a month if I need it.

I had an informal chat with my branch manager today who said that unsecured loans for deposits are a big no-no even if they're family funded. He also thought it would make a mortgage unaffordable, but even if we ended up paying £1,000 a month for an expensive mortgage (most non-binding quotes we've had end up between £600 and £800), we bring in £2500 net a month with £500 expenses for food & bills (we call it household expenses and have an account purely for this) so an extra £500 for this loan repayment should not be too difficult surely.

Just wondered what was the best way around this, should I just continue to save so that I have the extra £2500 myself (currently saving £800 a month) so we don't need the interest free loan, and maybe just use that if we need to for any remedial work for a prospective property?

I am aware as well that I need to save up around £3,000 for fees but just wanted to know where I stand, the reason brother has gifted the money is that he is keen for me to get on the property ladder now rather than in 18-24 months when I've managed to save the £15,000 + £3,000 myself.

amnblog

Can you not try to get a 95% mortgage so that you have enough deposit?

Dreaming_2

I could - just the rates are punitively more expensive. As we're saving £800 a month it would be worth waiting the few months to build up to 10% at any rate. My brother is simply giving me the opportunity to expedite the process.

I've spoken to two bank managers on this matter now and it seems to be one of:

• We don't want to know - answer questions honestly and fully, but don't volunteer anything that's not asked which could reflect poorly on the process
• Make sure the loan element is 'officially' a gift - if you want to pay back your family you are welcome to do so but there's no legal obligation

It does seem a little dubious but at the same time, the new rules don't seem to have any nuance for realities on the ground so have to jump through the right hoops.

Thrugelmir

Dreaming wrote: »

It does seem a little dubious but at the same time, the new rules don't seem to have any nuance for realities on the ground so have to jump through the right hoops.

The realities of life never apply to people when they are applying for mortgages. Always happen to some one us. Over optimism rules.

Be pragmatic and do what's best for yourself. At the end of the day debt has to be repaid. So is a ball and chain that you'll be carrying around for many years. Setting off on the right foot will pay dividends in the years to come.