Should i get a loan as rates are so cheap?

danlightbulb

lovinituk wrote: »

Well you seem to know best so what was the point of this thread?!

Good luck!

With all due respect I do want advice, but no good reason has been given why this won't work.

What If I had a loan 5 years ago and used that money for the deposit but since paid off the original loan? The origin of the funds is a loan but I'd have paid the equivelent in savings over the period. What if it was 3 years ago, 2? This can't be black and white.

glosoli

danlightbulb wrote: »

Fraud is a very extreme word for this scenario. I already have £7k saved and £7k on a 0% card. Have I saved that £7k or has it come from the card? (Answer - Ive saved it despite having the debt). This is a very similar scenario. Its all the same money and there is headroom in my finances to accomodate more (cheap) debt.

Yes it would be a fraudulent application.

Mortgage fraud is a crime in which the intent is to materially misrepresent or omit information on a mortgage loan application in order to obtain a loan.

You know it is, otherwise would you admit you would lie and say you saved it up?

The difference between this and your credit card is your solicitor will be able to confirm through statements that you saved up the funds of your own accord, the same will not be true of the extra £10,000.

You can do what you want, but don't be surprised when it all goes wrong and you have a fraud marker put against you.

danlightbulb

So are you saying that a solicitor would ordinarily want to see years worth of bank statements to prove I'd saved up the full amount? My accounts have lots of ingoings and outgoings, and I have several savings accounts, and over the years have moved alot of debt around on credit cards. How could the solicitor track this, I'm not sure I even could.

I also have earned alot from matched betting. So that is money I have saved although its been generated from elsewhere. What is this declared as?

it seems to me that saying a deposit has been saved is a very grey area for anyone who has debt alongside. Can you really say you've saved it if you have debt as well? I am making a choice to trade off savings instead of debt repayment, aren't I?

Over the past year I have paid around £6k off credit cards. I could have put this in my savings account instead, and kept the CC's running at 0%. There is no difference between the two scenarios, my net debt is the same in both. What if now I took that money back off the CC? Effectively I'd paid it off then transferred it back to myself (i.e ive treated my CC like a savings account). I could then have a loan to pay off the CC. Again, same net debt position, nothing has changed except the balance across different accounts.

Can I borrow money back from my CC that I'd paid off instead of saving it?

glosoli

danlightbulb wrote: »

So are you saying that a solicitor would ordinarily want to see years worth of bank statements to prove I'd saved up the full amount? My accounts have lots of ingoings and outgoings, and I have several savings accounts, and over the years have moved alot of debt around on credit cards. How could the solicitor track this, I'm not sure I even could.

I also have earned alot from matched betting. So that is money I have saved although its been generated from elsewhere. What is this declared as?

Solicitors will look back as long as they deem necessary to be satisfied of the source of the funds. Part of their responsibility it to prohibit money being laundered into the system, and as you can imagine (without meaning to be disrespectful), realising a first time buyer is using an unsecured personal loan as a deposit shouldn't be too difficult to uncover.

Furthermore, loans provided for the purposes of the purchase of a home are required to be covered by MCOB regulations, which is why when you look at a list of "reasons for the loan" dropdown boxes on bank websites, you do not see this listed as a reason. Therefore, in order to pull off this cunning plan, you will be essentially be doing two fraudulent applications (assuming you would be choosing something akin to home improvements as the purpose).

It really is a non-starter. Save up more funds if you require a bigger deposit.

danlightbulb

I know you are sticking to the letter of the law but it seems like a very grey area to me.

What if I was going to buy a car, and I had a personal loan for a car. But then in a couple of months time I decided that I couldn't find a car I liked and changed my mind. I'd have £10k sitting in my account, fully intending to buy a car with it originally but changed my mind. Decide instead to buy a house.

You can be cynical of course and say I planned this all along. Which of course I have done here, but this situation could also genuinely arise.

I am in the best finanical position I have ever been in, some decent headroom on outgoings, but saving for the deposit still takes ages simply because of the large sums involved. The monthly repayments are not a problem.


Alot of people will be moving large sums of money between savings and current accounts these days, with savvy people doing alot of switching around to get the best rates. How would a solicitor satisfy himself that there wasn't a cash injection somewhere along the way at some point in the past, say 2 years ago if the person has been saving for a considerable time? Would the solicitor have access to my credit report, would he even know there was a loan? What if I was saving via another account and only brought the money back into my main account prior to the mortgage application? These are all things which must arise every day with people, and nothing untoward about it at all is there?


I want to be clear I don't have to lie on my application form. I don't know how much space is on there but I could simply say my deposit has come from a mixture of direct saving, and previous debt trade offs. Which is true. It would be genuinely difficult to tell how much is from each stream because it is effectively all the same money moving around, back and forwards to maintain the optimum trade off at any point.

glosoli

If that's what happens then that's what happens but you need to be upfront and honest with the mortgage lender to begin with. It was when you mentioned about disguising the deposit as savings you have personally accrued I figured it important to point out flaws in your plan.

If this is the situation that you will be finding yourself in then do your research into mortgage lenders who will accept it as a suitable deposit, there are some out there.

danlightbulb

I don't have to lie thorugh my teeth no, I wouldn't do that. But I think its fair not to volunteer unneccessary information too. To say the deposit has come from a mixture of savings and debt trade offs over a period of several years would be fair. They'll see the loan on my credit report, but they don't see how my savings have fluctuated over time so its pretty one sided really. In reality, my savings, loans and credit cards will all be balancing off against each other in different combinations over a period of time.

Richey_

Dan, reality check....
You have no savings, I would even refer to it or think of it as such.

You have £7k in the bank and £7k of debt on a credit card
You want to borrow £10k as a loan to put another 10k into "savings"

The net of £17k in the bank and £17k in debt = ZERO SAVINGS

Banks are not silly. I would spend the time searching this forum for CIFAS markers, a marker for,fraught which if applied by the bank will mean that you cannot even get a bank account for six years yet alone a mortgage. You cannot even get a phone contract or credit card.

Do what the rest of us have had to do. Make a lot of sacrifices and just save, save, save.

Banks aren't silly, plus your affordability will be knackered with £17k of debt,

What do you earn?
What loan to value are you seeking?

glosoli

In response to the edits of your above post, people do move money around often between savings accounts and current accounts, however this layering process isn't going to fool a solicitor, if nothing else it will heighten their reasons to dig further and request statements for all of the accounts. At the end of the day all money has a source, and £10,000 isn't going to come into existence through moving money around. Eventually they would come across a credit from Bank PLC of £10,000 on one of your statements, and there would be some explaining to do if the applicant has said they saved it up.

danlightbulb

You are absolutely right, I have no NET savings. But I have compared mortgages with debt and without, and by far the best situation is having a deposit even though I have debt. I can't do anything with zero deposit even with no debt, as you know, 100% mortgages don't exist now.

I have worked hard since I got divorced a few years ago (carrying over alot of debt) and have paid most of it off. But that has come at a price because I have only been able to save small amounts. Now Im saving decent amounts, and can easily service the debt.

I'm 37 and very concious of getting on the ladder again sooner rather than later, because I then start to hit issues with repayment period leading into retirement.

I earn £43k (single person so meet all outgoings myself) and am looking to get 90% LTV on about a £140k house. Should be well within my affordability. I need £14k deposit for that, which is still a couple of years away, or more if I pay off the credit card.

I don't think its unreasonable in my position to try and shortcut the saving if the whole thing remains affordable.