Personal loan to go towards mortgage deposit

xNaomi

Hi,

Is anybody aware of any loan providers who offer personal loans that can be used towards a deposit for a mortgage? 

Due to COVID and less lower LTV products available, we have been advised to get a personal loan to top up the deposit from 10% to 15%. Problem is - I haven’t been able to find anyone who will lend for this purpose.

MovingForwards

Who advised you to get a loan? Very few mortgage lenders allow a loan to be used as part of the deposit.

nick74

Northern Rock used to specialise in this, although you may remember it didn't go terribly well for them.. 

DCFC79

Your not meant to use a loan as a deposit, would you be be able to make the payments for the loan plus the mortgage ?
If you were to do so you may find yourself stretched to the limit and questions could be asked why you used a loan.

amandacat

There’s nothing to stop you getting a personal loan for “other purposes” and using that. A loan repayment will be taken into account for the affordability of your mortgage so will reduce what you can borrow. I’ve known people to get a personal loan and state it was for something like a holiday. Then use it for a house deposit. There will be many people who say you shouldn’t do it but if you can afford the loan repayment and mortgage repayment and it gets you on the housing ladder... 

DrEskimo

amandacat said:

There’s nothing to stop you getting a personal loan for “other purposes” and using that. A loan repayment will be taken into account for the affordability of your mortgage so will reduce what you can borrow. I’ve known people to get a personal loan and state it was for something like a holiday. Then use it for a house deposit. There will be many people who say you shouldn’t do it but if you can afford the loan repayment and mortgage repayment and it gets you on the housing ladder... 

Promoting fraud on a loan application, and then fraud on a mortgage application....

Great advice....

jonesMUFCforever

In this day and age 100% a normal mortgage lender would not let you borrow the deposit.
100% if you put the real reason you want the personal loan  for they would decline you.
You then also have the search on the credit file.

Don't do it - save a little bit longer or find a different mortgage broker.

MinuteNoodles

Mortgage lenders are so against it that as a parent if you give your kids some money towards a deposit the lenders require you to send a letter stating it is a gift, not a loan and you will have no interest in the property.

SpreadableToast

DrEskimo said:

amandacat said:

There’s nothing to stop you getting a personal loan for “other purposes” and using that. A loan repayment will be taken into account for the affordability of your mortgage so will reduce what you can borrow. I’ve known people to get a personal loan and state it was for something like a holiday. Then use it for a house deposit. There will be many people who say you shouldn’t do it but if you can afford the loan repayment and mortgage repayment and it gets you on the housing ladder... 

Promoting fraud on a loan application, and then fraud on a mortgage application....

Great advice....

Looking at their history they were asking about 10 years ago about getting a CeMAP qualification...

If they got it and they're currently a mortgage adviser I'd hope they won't be giving their clients the same advice.

xNaomi

We have a lender who is willing to consider part of the deposit coming from a personal loan as long as it's not from them.
We can afford the monthly loan repayments + mortgage repayments.
It's unfortunate that 15% is the minimum deposit for us as it is for a new build & it will take us some time to save up that extra 5%. We have been renting for 10 years now so would like to start putting the money into our own house

John_

amandacat said:

There’s nothing to stop you getting a personal loan for “other purposes” and using that. A loan repayment will be taken into account for the affordability of your mortgage so will reduce what you can borrow. I’ve known people to get a personal loan and state it was for something like a holiday. Then use it for a house deposit. There will be many people who say you shouldn’t do it but if you can afford the loan repayment and mortgage repayment and it gets you on the housing ladder... 

That’s fraud. A great way to be shut out of mainstream finance for many years.