Should i get a loan as rates are so cheap?

danlightbulb

I'm not going to do it if there is risk of it not working, hence why I'm asking. And I wouldn't lie on any forms or lie in my answers to lenders questions.

I'm surprised there isn't more guidance on the subject though. Many people must apply for mortgages with more complex financial arrangements, combinations of cash and debt, stoozing credit card balances etc. In this situation, how do you (genuinely) determine the source of the funds?

Pixie5740

This thread is pointless. The OP asks for advice, is given advice, disagrees with the advice but is too much of a cowardly custard to go ahead with the plan anyway.

danlightbulb

Pixie5740 wrote: »

This thread is pointless. The OP asks for advice, is given advice, disagrees with the advice but is too much of a cowardly custard to go ahead with the plan anyway.

The advice has been very black and white though. I don't think a good justification has been put forward as to why this won't work, taking into account the grey areas involved when people have a combination of cash and debt. Not trying to be pedantic.

Perhaps my viewpoint is skewed and everyone who gets a mortgage has no other debt and a 5 year audit trail of regular savings by standing order on an otherwise perfect bank statement?

Pixie5740

Yes people get mortgages whilst having debt. It's not about having a 5 year audit trail it's about your solicitor, who will probably be working for the mortgage lender as well, being satisfied with the source of your deposit. The solicitor has to comply with anti-money laundering regulations. Lenders are have also tightened their lending criteria in recent years. Some lenders will accept a borrowed deposit but they are few and far between.

Why not go and see a mortgage broker?

StopIt

danlightbulb wrote: »

The advice has been very black and white though. I don't think a good justification has been put forward as to why this won't work, taking into account the grey areas involved when people have a combination of cash and debt. Not trying to be pedantic.

Perhaps my viewpoint is skewed and everyone who gets a mortgage has no other debt and a 5 year audit trail of regular savings by standing order on an otherwise perfect bank statement?

It is quite simple.


If you have 17k of savings and 17k of debt, it'll cancel each other out when your broker will do the calculations for your mortgage.


That's before you're asked where the money came from. If you lied and said it was savings, instead of a loan, you'll be deep in trouble.


Put it this way, if it was that simple to get a mortgage, I'd have one by now. I could easily do the same as you suggest but I already know the outcome.


Honestly, you come across as someone who thinks they've found this magical loophole to circumvent saving a deposit for a mortgage, you have not done so.


A LISA if your best bet to save for a deposit right now with the bonus offered, but it still requires actual saving, not borrowing.

danlightbulb

Ok so look at the two posts above.

One says people get mortgages whilst having debt. The other says the lender will look at net savings and see its zero. They both can't be right?

[Deleted User]

Yes they can. The two statements are not mutually exclusive.

danlightbulb

Can the term 'borrowed deposit' be explicitly defined?

For example:
Over what time period?
What if some of it is borrowed and some not?
What if net savings are zero?
What if the borrowings were used for another purpose despite the person having some cash too?

StopIt

danlightbulb wrote: »

Ok so look at the two posts above.

One says people get mortgages whilst having debt. The other says the lender will look at net savings and see its zero. They both can't be right?

If your debt is less than your cash, that is what is taken into account.


So you can have a few thousand on a 0% CC and have 15k in cash, but have 15k in cash and 25k in debt, and you'll be shown the door.


The message, if you're not aware yet is not that debt is not allowed in a mortgage application, but the nature of it. You cannot fund your deposit by debt because a broker will find out, one way or another, and the layers of deception required to hide it will make the consequences worse the deeper you go.


To answer your questions above, most are not relevant.


You'll be asked where the deposit came from and you must answer truthfully.


Also, regardless of the reasons for initial borrowing, if you have no, or little net cash after debt, you will be turned away by most brokers.

adindas

The lenders, have access to your credit file. So they could easily see that you are funding your house deposit from loan by using loan from credit cards just by looking into your credit file.

If you have a deposit 17k and your credit cards balance is 17k you literally have nil for deposit.

All of your credit card balance is recorded on monthly basis. If you recently got a new credit card and the balance is already 10k + 7K from the old one., it does not need an experience person to take conclusion where the money is coming from. In fact it is an insult to the underwriters intelligent.

Also almost all (if not all) will definitely specifically ask you about your current your debt, credit card balance,etc.

If the method you proposed were working people had been doing that since along time ago, as it is a no brainier.

Not to mention as other has been pointed out, the solicitors will ask you where the money from deposit is coming from.