Strange advice from broker

Dmnd

Hey peeps

I know taking a loan out in order to pay for a deposit is frowned upon by the lenders however when I mentioned this to the broker he mentioned that although it’s not ideal, I could take out a 20k loan keep it in my account for 3-6 months. And that should satisfy the banks that it’s been in my account for long enough.

What are your thoughts? We ran a calculation on couple different websites and some lenders totally ignore the repayment for the loan whilst some offer slightly lower amount that could be borrowed. I know it would show on the credit file that there is an outstanding loan for 20k but just wanted to see if anyone else has ever done it this way.

ACG

Sounds wrong to me - assuming they were planning on put the loan down as anything other than a loan on your application.

John-K_3

My thoughts?

You should save up a deposit if you want to buy a property.

Dmnd

Quick update* credit union doesn!!!8217;t put the loan on your credit file so essentially it won!!!8217;t be visible on the credit report. I currently have a loan with them (almost paid off) and not visible on none of the credit report providers.

So essentially it!!!8217;s all about keeping it on the account for x amount of months so it the bank statements are consistent.

(Yes I know saving up is a better option however when the property prices are going up 8%-10% every year it!!!8217;s difficult.

Richard_Pia

Some lenders are actually ok with a personal loan for a deposit provided affordability still fits with the loan as a commitment. I'm not sure taking one out so early on in the process is a good idea though. What if it turns out you need a bigger or smaller deposit than first thought?

ACG

Are you planning on declaring it as savings?
If so, you will be committing mortgage fraud. If it gets picked up on, you could find yourself on National hunter/fraud watchlist.

As richard says, if you are declaring it as a loan then no need to wait as some lenders may accept it.

Dmnd

Hmm mortgage fraud implies that i have illicit intencions.
Right? The money isn’t being laundered or obtained illegally. I’m simply borrowing money to pay something off. Perhaps it’s not ethical, which I get. But how would the lender find out, if the money has been in there for X amount of months. What would prompt them to ask for more thn 6-12months bank statements..

For the previous comment, if i need a lower deposit i’ll just pay off the loan early..

Typhoon2000

You could pay everything with a loan including your rent and save all your earnings instead over 6-12 months. Then you will have bona fide savings.

Dmnd

So you’re saying take out the 20k, pay off all the debt (5k currently) Put 10k in the bank, live off with 5k for 6 months, dont touch the salary that comes in each month, and after 6 months it just looks like money accumulated over time.

Pretty genius tbh. Now we’re getting somewhere

Richard_Pia

Sometimes a lender won't even ask for proof of deposit. For anti-money laundering purposes however, your solicitor may need to see the source of funds. If they discovered this was from a loan then they are likely to check with the lender if they are ok with it.

You are always best to do these things above board as you don't want to be found out as falsifying an application.

ACG

Forget ethics, if you put down that this loan is anything other than a loan, it is fraud. You are putting down on an application for your mortgage that your deposit is savings. That is a lie, which is deception which makes it fraud.

This is not a grey area, it is black and white no matter how much you try to butter it up.