100% Mortgage - Still need deposit??

logic

I have just went sale agreed on a property after getting approval on 100%
mortgage. Now my solicitor says that I still need 10% inital payment?? What
the f**k is the point of a 100% mortgage if I still need a deposit??

lazygit

logic wrote:

I have just went sale agreed on a property after getting approval on 100%
mortgage. Now my solicitor says that I still need 10% inital payment?? What
the f**k is the point of a 100% mortgage if I still need a deposit??

not not a 100% morgage.. its actually a 90% morgage with a 10% deposit out on a loan i think.. talk to your morgage supplier.. the 10% inital payment is covered in the 100%

blahblah06

Ye you will need it. When you close your sale you will get that deposit back. I just recently got the deposit back. Just get a loan from the bank if needs be. actually give your solictor a ring and say you want to take a draw down deposit and the value of the deposit on the house. you will need to pay some interest alright.

blahblah06

Lazy i think your wrong mate. You still need to pay a deposit for the house so you need to ask for a draw down deposit

leahcim

If you have approval for a 100% mortgage can't you just draw some of it down now to pay the deposit.

If builders didn't request a deposit every Tom, Dick and Harry would sign up to buy a couple of houses from the plans and then just wait until they are completed and then decide based on whether the price has gone up whether to take them or not with absolutely no risk to themselves. Paying a non-refundable deposit and signing a contract prevents this from happening.

threebeards

A vendor needs an 8% or 10% deposit to secure the purchase. That figure is non refundable in that once you pay the deposit and sign contracts you're then committed to complete the sale.

Of all the 100% mortgage providers, only 2, Bank of Ireland and Permanent TSB offer the facility to draw down the deposit by way of a pre approved personal loan. This is payable until the closing of the sale when the full 100% is drawn down and one of the conditions on the letter of offer is that the loan a/c no. 1234567 be redeemed from the proceeds of the cheque.

Who have you got approval with?

logic

Cheers guys, its with Ptsb and I just spoke to them and you can get
the deposit as a pre approved personal loan. Takes a week and a half.
The sellers are threatening to pull out if they don't have the contracts
by next week.

I don't want to find out if they will fulfil the threat so I may have to look
to the relatives in the meantime.

blahblah06

ye im with tsb myself. there normally very quick. just send the form backs as quick as possible. no more panic haha

MorningStar

logic wrote:

Cheers guys, its with Ptsb and I just spoke to them and you can get
the deposit as a pre approved personal loan. Takes a week and a half.
The sellers are threatening to pull out if they don't have the contracts
by next week.

I don't want to find out if they will fulfil the threat so I may have to look
to the relatives in the meantime.

How did you not know this? Your advisors are in gross fault if they never explained how it works as is the mortgage company if seperate.

I get this is all new to you but your own research should have made you at least wonder about the 10% deposit that is standard in all property purchases. How did you think it was going to work?

Don't forget the personal loan you get charged interest and check what rate. Essentially it sounds like a bridging loan more than a personal laon.

logic

Conversations with each party involved had been short each time and
only over the phone.Had only spoke to my solicitor for the first time today who told me about the 10% deposit. The bank had never mentioned it while
I was applying for the loan, they just said the pack will be sent to the solicitor and she would look after that.

I am presuming it is a bridged loan of some sort but I'll find out.

MorningStar

I am a carful person by nature and fix problems first rather than look at everything that is right.
It all sounds like you are very rushed on this and lacking some general understanding.
Hopefully everything will go smothly but if it doesn't take comfort in giving your self time to do more research and line things up better.
By being rushed you may get yourself in a situation you would rather not be in. As property is with you for a long time don't worry about walking away if need be.
Good luck with it all, very stressfull thing to do around Christmas.

threebeards

logic wrote:

Conversations with each party involved had been short each time and
only over the phone.Had only spoke to my solicitor for the first time today who told me about the 10% deposit. The bank had never mentioned it while
I was applying for the loan, they just said the pack will be sent to the solicitor and she would look after that.

I am presuming it is a bridged loan of some sort but I'll find out.

It's not bridging loan, it's a term loan @ 8.6%APR but I'd imagine that will increase (if it hasn't already done so) as a result of ECB rate increases last week.

u2gooner

I recently got 100pc too. Needed the ten pc and the bank kindly offered it upfront not advertising the interest on the loan. So for a 29000 deposit I was expected to pay back a total of 43000 after interest. Check the small print

JohnBoy

WHAT?

14 grand interest?

how long did it go inbetween?

u2gooner

dont know, as you can imagine i didnt read too much further after i saw that

FreeAnd..

The 14 grand interest is what you would pay if you were to pay that loan back after ten years but what happens is as soon as you pay the deposit you start paying back this loan per month until you draw down on the mortgage. Once this happens - as the mortgage is 100% you get the full value of the property (including the deposit amount). this is then used to clear the deposit loan so effectively you will only have paid interest on the deposit loan for 1 month (or however long it takes for you to start drawing down i.e. sale fully completed). It would have to take 10 years before the property is ready for the deposit loan to accrue 14 grand interest which somehow I dont see happening...

The other thing about this loan is that once you are fully approved for the mortgage you are automatically approved for the deposit loan not like other personal loans where collateral will need to be put up and the whole loan process gone thruogh again...

Victor

I wondering if the deposit loan is allowed mortgage interest relief.

FreeAnd..

I was wondering that myself Victor, the broker that was with didn't think so but I remember reading that the TRS is based on a loan for a home - and maybe the deposit loan comes under this. Our deposit is with our solicitor and we have not as yet made the first repayment on the term loan. That is something that i must look into this week and see how I fare. If anyone else knows it would be greatly appreciated

FreeAnd..

I have just rang that TRS office in Limerick and they said that the Term loan used for the deposit will qualify for TRS. Thats pretty sweet, I must fill the forms in ASAP.

From the site the rules are:

The qualifying conditions for tax relief on mortgage interest repayments have not changed. Interest must relate to money that you have borrowed to purchase, repair or improve your sole or main residence.

So basically the loan is being borrowed to purchase our main residence so we will qualify.

blahblah06

so what exaclty do you mean. You get a bigger discount on the 100 percent or what

FreeAnd..

Not exactly, for me personally what it will mean is that my repayments on the Term loan (over the next year - thats when the property will be finished) will qualify for tax relief. Thinking about it, it might work out that I get less tax relief than if I wait until I draw down on the mortgage because as a FTB I get relief for year I begin drawing down and for the next 6 years. If I use my first year to claim relief on a smaller interest amount associated with the term loan I will qualify for less relief simply because the amount is less. Then again, the interest rate is 8.5% or so, so maybe it would be worthwhile claiming TRS on it. I need to work out the figures and see where it leaves me. Anyone have any opinions on this or am I looking at it from the wrong angle altogether?

Victor

You are still paying interest on the deposit amount, even if not the full whack.