Personal loan to go towards mortgage deposit

tim_london

They are ways to 'top up'.  I will assume for now that a qualified financial advisor has verified that you can afford a mortgage payment and outstanding debt balance.  That's why when you play with the bank mortgage affordability calculator there are usually some slack of what amount of debts you can have before it affects the amount you can borrow.  If you are a high earner with then this figure can be very high.

1) You can get a balance/credit transfer.  This will flag as a promotional rate borrowing in your credit file and will not affect your score too much.  I suppose it is ethically right because they never ask you want the money is for.

2) You can get a loan which may allow you to borrow more.  However this may feel ethically wrong because banks do ask what is for so there is an element of lying.  But at the end of the day unsecured loan is well... unsecured.  By definition the bank is lending money to you in your name, not for a specific reason.

However I do not think borrowing within 3 months of a mortgage application world work.  Tip: there are many qualified mortgage advisors in the 'Mortgage and Endowment' part of this forum.

foxy-stoat

John_ 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... 

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

If you follow the letter of the law and credit agreement/loan application then yes - in reality though very unlikely anything will actually happen....would it still be fraud if I took a loan for holiday then a few weeks before I was due to buy my holiday that country went into lockdown and I left the money sat in my account for a few say 4 months....then I decided to move, and if it was how would any lender find out, as long as the contractual payments were met....should I march myself off to the nearest man'd police station and tell them to put the cuffs on.

One way that the lenders may look to pursue a fraud case would of if the sap took out 10 loans then went bankrupt a few weeks later and said they had no money.

jonesMUFCforever

xNaomi said:

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

Name the lender!
Are you sure it is the lender doing this or a dodgy/desperate mortgage broker trying their best to get a sale through?
Think about it for a second - if you can afford the loan repayment and mortgage why isn't the loan amount already saved?
Also with an owned property you will have a lot more bills to pay - if something breaks down in a rented property you get the landlord to sort it.