Is deposit from a loan a good idea when buying a house?
One thing is certain: in most cases, when buying a house, you will be required to have a deposit. So what should you do if you want to buy but don’t have enough deposit? Would taking a loan or borrowing from other people be a solution
We have been recently approached by some customers who had borrowed so they have a deposit and they were very disappointed to learn that this would not help them!
First of all, whilst lenders usually accept a gifted deposit (parents, siblings, grandparents can gift), on condition it is not repayable, only a very limited number of lenders would consider if the deposit was borrowed from a third party or from another lender. By taking this step, you are going to limit yourself extremely in terms of lenders’ choice.
Secondly, a loan for deposit may not only lower your credit score but it will also affect your affordability so the amount you could borrow as mortgage may get reduced!
Deposit coming from a borrowed amount is one of most common issues we see daily. Remember, before you take any financial decisions, you should speak to a broker first. Otherwise, you might end up with a loan but with no mortgage in the end!
Contact us if you have any questions.