Can I use a loan to buy a house out right - I don't mean to use as a deposit

itchy83

Hi,

I have found a property I am interested in making an offer. It's an older house that needs a small bit of work to make it liveable, but has great potential for building on. It is advertised for in the region of €70. Yes it is in Ireland and I live in Scotland. I can't get a mortgage in Ireland until I live there for 6 months and I have spoken to the man that owns it and they are looking for a sale within 5 months.

My bank are advertising loans up to £50,000 over 7 years, and the monthly repayments are less than my current rent. I am thinking of offering c. €50k, and if they took it I would move home (live at my mother's until the initial work is done) so effectively the loan repayments would replacement my rent.

I suppose I want to know would a bank give out a loan if they knew I was planning on moving to another country? I can pay into my account from Ireland, and then when 6 months has passed i'd get a mortgage to cover the loan and do some work on it...

It is all theoretically speaking at the minute, as the sellers may not accept the offer, which takes me to my next question, what is the most you can borrow as a loan before it would be classed as a mortgage? and where/who could I get it from? Do I need to bank with them?

Happy to answer any questions if I've left something out.

Thanks

[Deleted User]

Generally not - most lenders don't allow personal loans to be used for property.

DrEskimo

What determines if it's a mortgage or not is not the amount, but whether it is secured on a home or not. A personal loan is an unsecured loan.

The most you can borrow is based on income and credit history. You would have to speak with your lender, but I imagine you would need a sizeable income and good credit history to borrow such a large amount at a reasonable APR.

Whether they would accept the reason for the loan to buy a house is another question too....

Dr_Crypto

A friend of mind did something like this. He had almost enough cash but was about £20k short so took a personal loan. I think he told them it was for a new car! 

itchy83

Thanks for your responses folks,

I have done some online loan calculators which have showed I could borrow that much based on my income and I have a good credit score. I'd hope they are right! I haven't made contact with the bank yet as I wanted to get some other opinions.

My brother mentioned the "car loan" idea too. If I was to apply for this money as a car loan that means I'd be still paying rent in their eyes and I don't think they'd approve that size loan knowing I'd have to repay the loan and pay rent. So maybe being upfront and honest would be the best way, would you think? 

Getting a loan and moving abroad is another question...

Are there any alternatives to a bank for getting this kind of money? 

Thanks again   

MallyGirl

saying that it is for a car would be fraud. 

itchy83

Deleted_User said:

Generally not - most lenders don't allow personal loans to be used for property.

Do you know the reason why they don't?

Grumpy_chap

A mortgage is usually cheaper than loan because the bank gets security.

From a lender's view, instead of a secured mortgage, you want to take an unsecured loan and then leave the country with the money to buy a property there.  Irrespective of your true intentions and your personal integrity, this is going to look questionable to a lender.

Do you know it is viable to get the 70k property for 50k?

DCFC79

itchy83 said:

I have done some online loan calculators which have showed I could borrow that much based on my income and I have a good credit score. 

Do remember your score is of no relevance for loans, mortgages etc, your history is whats important.

Who is giving you the good score ?

There are 2 other credit ref agencies who rate you.

itchy83

Grumpy_chap said:

A mortgage is usually cheaper than loan because the bank gets security.

From a lender's view, instead of a secured mortgage, you want to take an unsecured loan and then leave the country with the money to buy a property there.  Irrespective of your true intentions and your personal integrity, this is going to look questionable to a lender.

Do you know it is viable to get the 70k property for 50k?

In fairness, no i don't know if they'll accept the offer. but I spoke directly to the guy selling it as we are a fairly close knit community and everyone knows someone who knows someone if you get me! he is looking for a quick sale, and in the region of €70k really means 60 - 65k, and €60k isn't a hundred miles away from £50k... with quick sale they might accept it, maybe wishful thinking but if your not in you can't win!

Yeah on your second point, i think that is where my plan will fall down. even if i was able to get a loan for that amount, the fact i'm moving abroad with it will probably not sit well with my bank, even though i am planning on keeping my uk bank account and savings account open when i move. 

I suppose I won't know for sure until i speak to the bank, they'll tell me quick enough yes or no!

Thrugelmir

£50k for an unsecured loan highly improbable. Even if you say it's for a car. The question would arise as to how you would afford to insure and maintain it. 

Doesn't sound like you've budgeted for legal fees etc either.