Mortgage deposit held in shares

Geography_rox

Hi,

does anyone know if banks will accept the value of shares held for a deposit when looking at mortgages? Or does it need to be held in cash? Having made a 30% return on the stock market this year I now finally have enough for a 10% deposit on a house. I’ve got the majority of my share holding in BP which I would like to hold onto for a few more months as I think it will head upwards (could be wrong obviously!) and will pay some dividend. I would be looking to buy a house with the money potentially over Easter, so would like to get approved for a mortgage sooner rather than later. Does anyone know if banks will accept my stock holding? Or do I have to sell up before applying?

thanks

grumiofoundation

I would be surprised if a bank would accept the full value of shares as a deposit (especially if all your deposit is invested?)

What will you do if your shares drop by 10% the day before you go to view a house will you be able to afford it then? What about 20%? 50%? 

In your position I would tell myself not to be greedy, and sell them.

If you insist on keeping invested don't spend a penny on fees etc until you have them in cash. 

Geography_rox

Thanks for your reply!

I realise the value of the shares could go down, but I’m relatively confident that it wont, and I can also save 2K a month the good old fashioned way in the meantime. If they do plummet then I guess I just can’t buy a house for a while, I can live with that risk! 

I think I’m thinking more of the mortgage in principle agreement so that I can see what my budget actually is when looking for houses, rather than the final mortgage at which point yes I will have to sell the share. Would banks give a mortgage in principle without selling up?

thanks again

Geography_rox

Ok don’t worry, I obviously am very confused about the mortgage application process! I got approved for a mortgage in principle without needing any evidence.. Roughly how reliable is that as an indicator of how much they will lend? I am aiming very much towards the top of what they will lend me (though monthly repayments still less than current monthly savings so should be affordable). Thanks!

beebop1

Hi,
I had 50% of my deposit in shares, bank just wanted a statement from dealing company with the value of the shares, no question asked about if it goes down or up.  Even at final application they just wanted a statement from dealing company

[Deleted User]

Quite common to have deposit held in investments of some sort.  Just need proof of availability of funds for application.   Someone could spend all their cash deposit just as easily as you can lose yours in the stock market so its doesnt make adifference with it being in shares

Thrugelmir

Holding all your eggs in one one basket is never advisable. You have no idea how BP will perform in the coming months.