mortgage deposit

[boobesque]

this could well sound like a very stupid question, but could i get a loan to pay for the deposit on a mortgage?

[chazza]

Yes you can - i know someone who did it

[atolhurst]

I think so, but think you have to declare it when applying for the mortgage.

[AliFlump]

we tried to do that and went to a couple of places to see what we could get and when we said it was for a deposit for a house they said you werent supposed to do that and they put it down as home improvements. We didnt need it in the end but thats what we were told

[dannydingbat]

You don't need a deposit for a mortgage. You buy a house for an amount of money which you have to find either from your own resources or from loans. If what you are saying is that you need to borrow 100% of the purchase price, you should find someone to lend you that amount. If they are not willing to do that, you should not lie to them by saying that you have saved the remainder of the cash when you have borrowed it. If you put false information on the application form, this is not only an offence but may give them an excuse to call in the mortgage if they find out. They will do so if the people lending the extra money want to put a charge on the propery to secure the loan.

[vicars]

IAssumptions:

You will declare your income to the lender.

You take the loan before you apply for the mortgage and so the lender will know what you have owing.

Assuming the above 2 are correct then you will probably find that the cost of a loan will reduce your income calculation / affordability calculation that the lender will end up reducing the loan they can give you. However if the loan is taken after the mortgage is assessed they will not know about this but you will be breaking the terms of the mortgage in that your deposit will be borrowed as opposed to whatever else you have put on the form. This is technically mortgage fraud, though I do not know in practice what the lender would do to you but may ask for the mortgage monies back (but unlikely unless you have problems paying the mortgage). Some mortgage lenders actually give you a secured loan as part of the mortgage to give you a greater mortgage amount (Northern Rock and Coventry are 2). You may however find that you can borrow the money over a long period and this will make the loan quite cheap and so it will not have such an impact on how mauch can be leant. Just make sure the lender knows you have the loan and this is fine - strictly speaking they need to know if you are borrowing to finance the deposit where you have not yet borrowed the money - so long as you declare it the lender has been given all the right information and you will not be in trouble, though as advised above it may not do you much good and the cost of a loan and a mortgage will be more than a slightly bigger mortgage.

[WoWo]

I think technically it would be fraud (if you didn't declare it), but it would only be an issue if you got in to difficulties with your mortgage and were investigated by the mortgage company

A very well know Politician did a similar thing and didn't get in trouble for it even though it was splashed over the papers because the mortgage company were not bothered about it, he was paying the mortgage and thats all they were concerned about.

But it should be pointed out that the amount a bank is willing to lend you for a mortgage is calculated on your ability to pay it back, if you have a loan for a deposit then you may struggle to pay it back, especially if you don't disclose this information to the mortgage company up front.

[kwikfit]

A friend of mine got his deposit on a Visa card, it can be done!