Borrowing for a deposit?

PrincessAthena

Hello


I am a first time buyer and this may be the silliest idea ever but ...


My partner and I only have enough to put down a 5% deposit on a house we really really want! It is a shared ownership property with a 50% ownership. Its valued at £200k, we would only have a mortgage for half, we only have 5k to put down as deposit. The mortgage adviser has said we can borrow £95k easily and then some. But to have this house we would need to put down 10% (10k)
No chance of having a 'gift' from any family members or a loan from anyone for the additional 5k.
We do have a 0% credit card with an offer at the moment to do a money transfer, we have a high enough limit that we could take £5k from and more if needed. I don't know if this is actually allowed? I understand some banks may not look at us as favourably if we have more debt. I appreciate no one can advise me on whether to do this or not but I wanted to make sure that I'm not breaking any rules by doing this.

joujou

Can you actually afford to do this?

Most (all?) credit cards will charge interest immediately on cash pull outs.

No bank will knowingly allow you to do this, and you'll have to jump through a lot of hoops, financial and ethical, to go around it.

It's a really bad idea.

foxy-stoat

If you can afford to make the monthly payments and still pass the affordiblity from the lender then thats one thing, but it will be very obvious to the lender that where the source of the £10000 has come from so that may well be a sticking point.

You COULD spend on the card on the monthly and day to day purchases and keep the cash in a seperate account that you would of spent, then when you have spent £5000 on the card you will look like you have saved the other £5000....This would take a good 6 months though, the lender may still ask questions though.

Neutrinno

joujou wrote: »

Can you actually afford to do this?

Most (all?) credit cards will charge interest immediately on cash pull outs.

No bank will knowingly allow you to do this, and you'll have to jump through a lot of hoops, financial and ethical, to go around it.

It's a really bad idea.

Not that I could see any bank having a problem with that like you say (what hoops? A money transfer is a very straightforward process), but he's not doing a cash pull out (like an ATM), he would be doing a money transfer which like he says; banks do offer 0% deals every now and then on transferring the money straight into your bank account.

While some lenders may be fine with you doing this for your deposit, it is very likely that the £90k lending figure you have been given will significantly reduce after the new credit card debt, meaning the loan may well then be unaffordable for you.

jewelleryangel

ImRob wrote: »

While some lenders may be fine with you doing this for your deposit, it is very likely that the £90k lending figure you have been given will significantly reduce after the new credit card debt, meaning the loan may well then be unaffordable for you.

I agree with ImRob - if you take out £5K on your credit card, that is additional debt you will have against your names which would reduce the amount of mortgage you could borrow. You will suddenly have £5K to pay off alongside your mortgage, and lenders are checking on people's outgoings more than they used to.

Also, your 0% card will most likely only be on purchases. My 0% card would charge me if I wanted to go to an ATM and draw out money.

Verix

Borrowing your deposit from a card or bank loan is not something that many lenders are keen on and would be pretty easy for them to pick up. If you are looking at a new build share-ownership you have lenders who can offer 95-100% of your share but I'm guessing it's not fitting with them?

kingstreet

There are several lenders offering 95% mortgages on newbuild shared ownership, so what makes your case only fit at 90%?

PrincessAthena

To answer the questions above

My 0% card has a money transfer offer, which means i transfer the money to my current account. I wasnt talking about taking it out at the cash point lol

We cant have a 95% mortgage on this house as its not a new build so we have to have a 10% deposit

We can borrow £180k for a mortgage, so im sure if we took £5k from the credit card, baring in mind we only need to have a £90k mortgage on this house it wouldnt make that much difference?

We have decided not to go with it anyway and save & hope the house prices dont go up too much ��

Mr.Generous

If you can't save the extra £5k without paying a mortgage now how will you be able to afford a mortgage PLUS a credit card debt? What I'm trying to say is if your income goes on living now it will still go when you get a property but I guess if your rent is currently higher than your mortgage will be its possible, but with a mortgage you will need insurance, council tax, water rates, broadband, gas, elec, tv license ect. If your living with parents or family all these are going to be a shock to the system. I would say SAVE the deposit, debt to fund debt sounds like a recipe for disaster, finances can cause a lot of upset in a relationship when money is tight.