First time buyer - deposit query

davidw123

Hello,

Me and my fianc!e are looking into buying our first home and wanted to get some advise on a quick query.

We are currently around 1.5K short of the deposit needed, and hoped that we could have this in a couple of months time. This weekend, five plots sold with only two left and are now concerned that it will go before we have that final amount saved.

We have no debts, other then a myself HP agreement on a car with 6600 left.

I have a Credit Card which has contacted me with a offer to bank transfer with a 4% fee and 14 months no interest.

Would it be wise to use this utility for the remainder of the deposit. We have been frugal up to now to maximise our mortgage agreement success and don’t want to balls it up with a bad impact on the credit score.

Thanks!

Dean000000

Well done you. I hope you enjoy hunting for you first house.

Question: can either of your mum and dads loan you the money, or, even £750 each side? I’d hope that isn’t too much of a stretch for them?

If not - with the benefit of age and experience on my side - don’t panic or fret if you lose out on the house you think you want.

Over the course of the next few months you might find something even better.

When I was first time buying, literally whatever house I viewed I wanted, and was ‘perfect’ only to find that it was actually the next house I viewed, and then then next, and then the next.... it’s natural for you to be excited....

But losing out won’t be the end of the world is all I am saying.

Good luck

Lokolo

Borrowing to top up your deposit is a big no.

However you have said plots have sold and only two left. So are these new builds? When are the expected completion dates?

It usually takes a few months and usually I wouldn't recommend it. But new builds sell months and months before they are complete, which would give you enough time to raise more deposit.

davidw123

Hi!

Thank you for the quick replies.

Sadly no, we haven’t been able to count on our parents for anything financially.

Yes, they are indeed new builds, which are due in July. The way I understood the process was we put a reservation fee down, they check our finances, with deposit in tow the application gets declined or accepted rather then being required closer to the completion date; but I may be wrong?

Thanks again for the kind responses, it means a lot!

ACG

Do not use borrowed money for the deposit. There are only 1 or 2 lenders who would consider this so unless you get it right, your mortgage offer would be invalid.

There are lenders who do not ask for proof of deposit (and leave it down to the solicitor), or where it is feasible you would have the deposit in place by completion, they are happy to ignore a slight shortfall at application stage.

If you are £1.5k why and are saving £750 a month, then it is reasonable to assume you would have £1500 by the time you complete. But you would also need money for solicitors, valuation and so on.

It could be worth speaking to a broker. It can be done and at normal rates but you want a lender who will need the evidence prior to offer.

AJGuy

As others have do not borrow the money!

What LTV are you looking at? Could you save the money in the next month or two? We paid our deposit days before completion. And all the solicitor required was proof that we could afford to save the amount in that time, we showed them previously saved amounts per month.

Monkeysocks42

We were required to provide evidence of deposit at the point of the mortgage application. We didn't quite have enough but we knew we would do after we next got paid. My mother in law signed a letter confirming that she was gifting us some money and the value of this was the difference between what we had and what we needed to show that we had. We never actually took this gift from her because by the time we exchanged we had more than enough for the deposit and fees.

davidw123

Thanks for the huge response! It’s been very enlightening.

I believe we can save the money before completion that isn’t an issue at all.

I do however need to investigate further into fees. I’m not quite sure what they would be as it’s a new build and they have recommended certain brokers etc. Any idea roughly on how much these are? Does it differ on new builds?

We are only getting a 5% but with a right to buy on a 220K property. (20% from Govn, 5% our deposit)

bopsybunny

Assuming you have a good rate, credit limit, and can afford repayments etc., could you just spend your normal monthly costs (rent, groceries, fuel, bills, etc.) on the credit card, and use the funds from your salary towards the deposit? That way you're not borrowing money for your deposit in the eyes of the lender!

We put some things like Christmas shopping, car insurances, meals out on 0% credit cards so we could put more in our savings just before we bought our house.

davidw123

But then wouldn’t this look like I’m in debt and it’ll reduce my likelihood of getting a mortgage? It’s a good prospect though!

Monkeysocks42

We paid a coupe of hundred to the mortgage broker, about £500 for the mortgage survey, around £800 on conveyancing fees, plus searches etc. The only thing that was more expensive because of it being a new build was the first registration fee for the Land Registry. I think that was approx £220.

Something worth thinking about though. When our mortgage offer was issued it was on the proviso that we paid off our car loan in full before completion. Luckily we had actually already paid it off but you don't want to incur legal and mortgage costs and then find that you can't proceed because you need to pay the car loan.