Should i get a loan as rates are so cheap?

lovinituk

Jeez, is this still going?!?

Just go and see an independent adviser who will look at YOUR exact situation and advise you accordingly. He might be able to find you a lender who is happy to take the deposit from a loan.

Stop wasting your time with all these what-ifs.

danlightbulb

lovinituk wrote: »

Jeez, is this still going?!?

Just go and see an independent adviser who will look at YOUR exact situation and advise you accordingly. He might be able to find you a lender who is happy to take the deposit from a loan.

Stop wasting your time with all these what-ifs.

I like to fully understand a situation before I take any action. What if scenarios are extremely useful.

I've found mortgage brokers are not that willing to talk as I'm not ready yet to apply. What I've been talking about in this thread would have to be actioned 6 months or ideally a year or more before I actually applied for the mortgage. It's a bit like the matched betting tranactions, I'm having to plan quite a way ahead to think about how they will appear on my statements at the time of application some way into the future.

The loan, if I have it now, will be 20% repaid in a years time. It's about how that financial structure would look in a years time, rather than how it would look right now. The loan is only being considered because of how cheap debt is at the moment. I wouldn't be thinking about this at 10% APR.

moneyistooshorttomention

I must admit I can see the logic of OP's position. The total amount of interest payable over that 5 year period is a lot less than will, presumably, be thrown down the drain paying rent for that 5 years (whilst nervously watching house prices go up as well).

I followed the very same logic - ie that of just how low interest rates are at the moment when it came to borrowing for my new kitchen on my house. I worked out how much would be wasted paying interest and decided it wouldnt be that much and would be worth it for the sake of getting better value for my money by having that kitchen several years earlier than I might otherwise do so. I anticipate paying the loan off early - but it would still be worth my while to do so even if that wasn't possible.

Personally - in OP's position - I'd visit a mortgage broker and say "I don't want to throw money away on rent for several years saving that amount - and the interest payable would only be less than £1,000" and ask what lenders there would be that would accept the decision I'd made as to how to proceed.

Then you'll know if it's possible or no. Meanwhile - it's just pure speculation as to whether it is possible or no and other people coming out with emotive words like "fraud".

lovinituk

moneyistooshorttomention wrote: »

Personally - in OP's position - I'd visit a mortgage broker and say "I don't want to throw money away on rent for several years saving that amount - and the interest payable would only be less than £1,000" and ask what lenders there would be that would accept the decision I'd made as to how to proceed.

I've already suggested that, twice.

No one is saying what they propose is not possible, but they need to speak to an expert who should know which lenders it may be possible with, without potentially dropping themselves in the proverbial.

StopIt

danlightbulb wrote: »

I like to fully understand a situation before I take any action. What if scenarios are extremely useful.

I've found mortgage brokers are not that willing to talk as I'm not ready yet to apply. What I've been talking about in this thread would have to be actioned 6 months or ideally a year or more before I actually applied for the mortgage. It's a bit like the matched betting tranactions, I'm having to plan quite a way ahead to think about how they will appear on my statements at the time of application some way into the future.

The loan, if I have it now, will be 20% repaid in a years time. It's about how that financial structure would look in a years time, rather than how it would look right now. The loan is only being considered because of how cheap debt is at the moment. I wouldn't be thinking about this at 10% APR.

In a years time the calculation will also be simple.


Current loan liabilities of £20,000 say with cash of £25k, net position is a £5,000 deposit.


If you had just saved the £5k, you'd have gained at 3% instead of paying interest, and thus have a bit more than £5k.


If you have the funds to pay back this loan, you have the funds to just save up for a deposit.


Either way, your net position is the important bit.

danlightbulb

This would presumably be a whole lot easier if I could directly speak to the lenders and put my case across with facts and figures. I'm not sure I trust a broker to do that effectively, I'd much rather take control of the situation myself. Who knows me better than me. And as moneyistooshorttomention above said, I'm better off than paying money out in rent for the same duration.the figures should speak for themselves regardless of the net debt position.

[Deleted User]

danlightbulb wrote: »

Who knows me better than me.

Very often, an impartial third party.

danlightbulb

The scenarios in one year time that I'm looking at would be roughly as follows:

Scenario 1. No debt.

Debt from credit card repaid.
No new loan taken out.
Savings for 12 months including what I have now: £7400.

Net position +£7400; no debt; deposit £7400. Debt as % of income = 0%.


Scenario 2. Keep credit card but no new loan.

Debt from credit card in 12 months time: £6600.
No new loan taken out.
Savings for 12 months including what I have now: £14000

Net position: +£7400; debt £6600; deposit £14000. Debt as % of income = 15%


Scenario 3. A loan now.

Debt from credit card in 12 months time £6600.
Loan outstanding in 12 months time £8500.
Savings including what I have now plus loan capital as well: £21800.

Net position +£6700; total debt £15100; deposit £21800. Debt as % of income = 35%


Assuming all debt is serviceable, which scenario would lenders prefer?

lovinituk

danlightbulb wrote: »

Assuming all debt is serviceable, which scenario would lenders prefer?

Ask the lenders or a broker for a definitive answer.

adindas

danlightbulb wrote: »

Assuming all debt is serviceable, which scenario would lenders prefer?

Noone apart from the lender you intend to borrow the money from will be able to give a definitive answer.

But if you wanted to learn from experience of other people, google it yourself you will be able to find it. I remember I have read the same post on this forum alone quite a few times.

What you mention have been mentioned and presumably tried by many people. If your proposed method could work without the need to be extremely lucky than million of people out there would want to try it. .

As other people has said that it is not impossible. But winning euro millions is not impossible either, is not it ??.

But in this particular case you have very little to loose to try it. Getting a zero percent interest on credit card is already a benefit, so you have very little to loose but something to gain. Even you can not get the amount you require to for deposit you might still use for stoozing depending on the fee and the interest.

It seems to me it is a very simple decision to make.
So why not try and feed to the forum back ....