Borrow your deposit

Legacy_user

At the cost of affordability you could, if a first time buyer who is renting, borrow the deposit as a personal loan, rather than save for years all the while paying rent

Definitely check the effect of affordability before considering

lisyloo

Do you have a link for this information?
Which lenders allow it?
Are there any downsides like higher rates, able to borrow less.

Of is it just an idea. I.e. You made it up and didn't research whether you can actually do it at all.

System

Lisyloo - nearly every affordability calculator allows debt, if you have both deposit and debt then the fact you haven't paid off the debt could always be looked on as borrowing to finance the deposit. Money in the account is money in the account and taking the loan a while before the mortgage could help with credit scoring.

What I have read says that deposit declared borrowed from relatives etc is included in debt or at least factored into deposit differently to cover that

Higher rates - only if you struggle with affordability
Borrowing less - yes, so its only for higher earners

Its a bit like Help to buy but more flexible

System

http://www.gocompare.com/mortgages/borrowing-a-deposit/

System

May depend on lender, may be best using broker

daveyjp

lisyloo wrote: »

Do you have a link for this information?
Which lenders allow it?
Are there any downsides like higher rates, able to borrow less.

Of is it just an idea. I.e. You made it up and didn't research whether you can actually do it at all.

Its what we did many years ago, but regs are much tighter now. We were never asked where our deposit came from.

lisyloo

If a lender asks where your deposit came from you habe to be honest. If you are not then they may find out via your credit report.
I read the go compare link before posting and it says you may be able to borrow less, it's arguably risky plus you may not get access to the best deals.

System

You do have to be honest, but you could shift everyday spending and anything that'd normally harm the deposit onto credit cards and then onto loans. And it may be possible for some.

Main risk I see is interest rate rise, but that's affect rentals too (as would any personal circumstance change) so its odd that someone can be considered OK to rent a larger amount of equity than they can mortgage - and I think that's purely because rental yields a higher rate than mortgage

Thrugelmir

MatthewAinsworth wrote: »

At the cost of affordability you could, if a first time buyer who is renting, borrow the deposit as a personal loan, rather than save for years all the while paying rent

Definitely check the effect of affordability before considering

Nothing new in what you are suggesting. Ask yourself why isn't this isn't a recommended option. If it's as simple as you believe.

System

Well to be honest anyone who can afford to lose a little affordability can darn well save up a deposit anyway, and it wouldn't help the low affordability credit check wise (it would save them money though if it were possible for them)

Love2bone

MatthewAinsworth wrote: »

Well to be honest anyone who can afford to lose a little affordability can darn well save up a deposit anyway, and it wouldn't help the low affordability credit check wise (it would save them money though if it were possible for them)

With the rates houses rise in value, borrowing to live rent free isn't that bad of an idea.

by the time someone saves 5 grand up for a deposit, or 10 - 15k, houses have usually gone up more than that.