Credit Card or Loan to part finance Mortgage

none

Just curious if it's a good way. I mean, the basic rule is, I suppose, to pay the biggest chunk upfront and only then sign up for monthly repayments for the remainder (of the sum and life).

So if the amount is, say, 350K, and I can get 50K paid upfront and pay the remainder over the 30 years, it's better than pay 30K first and then the remaining 320K over the years?

So if that's true, I want to borrow as much as possible from other sources for this initial upfront payment before getting the mortgage from the mortgage provider (within reasonable limits, of course). And for this I was thinking of getting a few grand here and there, maybe from my Credit Card and a loan from another bank. Paying out such short term loans, even with a bigger interest, is surely a better deal than paying out a 30 year mortgage even if the rate is lower.

So is it normal to get such loans to part finance mortgage? I'm just trying to understand this area logically I never had any debts but with prices bottoming out I think there may never be such bargains on the property market here

namloc1980

none wrote: »

Just curious if it's a good way. I mean, the basic rule is, I suppose, to pay the biggest chunk upfront and only then sign up for monthly repayments for the remainder (of the sum and life).

So if the amount is, say, 350K, and I can get 50K paid upfront and pay the remainder over the 30 years, it's better than pay 30K first and then the remaining 320K over the years?

So if that's true, I want to borrow as much as possible from other sources for this initial upfront payment before getting the mortgage from the mortgage provider (within reasonable limits, of course). And for this I was thinking of getting a few grand here and there, maybe from my Credit Card and a loan from another bank. Paying out such short term loans, even with a bigger interest, is surely a better deal than paying out a 30 year mortgage even if the rate is lower.

So is it normal to get such loans to part finance mortgage? I'm just trying to understand this area logically I never had any debts but with prices bottoming out I think there may never be such bargains on the property market here

It's never a good idea to borrow on a credit card unless you intend paying it off within a few weeks. Those things cost a fortune. The general rule is borrow as much as you can at the lowest possible rate i.e. a mortgage. I'm not sure what you mean by paying a chunk upfront...could you elaborate?

Long Onion

The fatal flw in your plan is that the repayments to the other short term loans will knacker your stress test for the mortgage and reduce the amount being offered to you by the institution.

It's a bad Idea, it would be better to take the mortgage for the full amount and then overpay on your instalments.

djk1000

You're going to spend X on monthly mortgage repayments and Y on monthly repayment on other loans, then you're much better off paying X+Y off your mortgage each month.

rainbowtrout

Sounds like you're trying to borrow the deposit from other sources. Those days are gone. Banks are not giving out 100% mortgages, they want to see a deposit. And showing up to a bank with say a 30K deposit and 30K in loans from other banks/credit unions/credit cards is just crazy. Not to mind the fact that it will cost you a fortune and the banks will probably refuse you on account of your high borrowings. That kind of borrowing got a lot of people in this country into the mess they're in at the moment.

Save your deposit. Then go and get a mortgage.

chris85

bad thing to be getting the deposit on credit... seriously. You wouldnt be allowed by banks anymore to get 100% mortgage but that is basically what you are trying to do on your own. Exact same principle and its an extremely bad thing.

VB1962

Please don't consider you Credit Card as a source to help buy your home. Max you should borrow is what you will pay off in 4 weeks.

Its back to basics - save the Deposit (min 10%), Legal Fees, Other Fees and borrow the balance over 20/25 years - not 30/40 years and pay back the principal and interest - no moratoriums / interest only periods etc etc.

If the home you seek can't fit into this - than its outside your range at the moment. Look at cheaper options or rent.

Please - I deal with people every day who did otherwise and find themselves in great distress.

none

Thanks for the input I'm new to this area so just trying to weigh all pros and cons of this idea.

Why I said that paying a big chunk upfront seems a better idea is primarily because of different interest depending on the LTV. So if, say, with my cash I can afford to borrow 90%, I fall into the (80% < LTV) category. But if I can borrow a few grand from other sources I can fit in the (50% < LTV < 80%) band which gives a better rate.

Also, what is the exact formula behind all local mortgages, anyone knows? I was thinking it's compound interest (http://en.wikipedia.org/wiki/Compound_interest#Compound) but it's not. I checked both AIB and BoI calculators but still can't figure out how they calculate their repayments.

For example, 300K over 25 years with AIB on (80% > LTV > 50%) offered at 2.48% would cost 1338.00 monthly (or 401400.00 in total). How do they arrive at this?

none

Getting back to this. Nobody still thinks it's prudent to enter the Mortgage term on a lower LTV at the expense of another small loan elsewhere? I guess I would require to get less than 5K to tip the scale to <=80% LTV.

ninebeanrows

I sincerely doubt you are going to get a 350k mortgage in this climate unless you are in a very good financial footing and attempting to make up your deposit using credit card does not indicate to me that you are.

BostonB

If you need a loan to get another loan. You can't afford either of them.

Priapus

none wrote: »

Getting back to this. Nobody still thinks it's prudent to enter the Mortgage term on a lower LTV at the expense of another small loan elsewhere? I guess I would require to get less than 5K to tip the scale to <=80% LTV.

No that is not prudent.

BostonB wrote: »

If you need a loan to get another loan. You can't afford either of them.

Agreed - hit the nail on the head.

none

Mathematically it is more correct so I was looking for other people's opinions. But it seems like no ones like this idea except for me & math

BostonB

Might depend on the interest on the "small loan", and the risk of interest rates increasing. 10~12yrs ago we had interest rates of approx 8~10%

If you can afford to pay 1300k+ a month into a mortgage, which shouldn't be more than a 3rd of your present income, IMO. Then you should have no problem saving a deposit of 15k in a year. It would seem unikely if you need a small loan to add to your deposit.

maryjane007

it will be next to impossible to get a mortgage if you havent cleared your loans in this climate

none

I got no debts or loans, I'm clean in this respect
What I was thinking is that I can pay now, say, 19% of Mortgage and, as such, fall into [>80%] LTV band. If I, however, get additional 5K from somewhere, I will be able to pay 20% of Mortgage and qualify for the cheaper option, i.e., [<=80%] LTV. Even if the difference in the interest rates between [>80%] and [<=80%] LTVs is relatively small, it will affect you for years and cannot be easily changed so I think it works out more expensive in the end than a high interest loan for 5K which will be cleared in several months.
Still doesn't make sense?

Priapus

rainbowtrout wrote: »

Banks are not giving out 100% mortgages, they want to see a deposit.

Save your deposit. Then go and get a mortgage.

is correct.

none wrote: »

Mathematically it is more correct so I was looking for other people's opinions. But it seems like no ones like this idea except for me & math

none wrote: »

I got no debts or loans, I'm clean in this respect
What I was thinking is that I can pay now, say, 19% of Mortgage and, as such, fall into [>80%] LTV band. If I, however, get additional 5K from somewhere, I will be able to pay 20% of Mortgage and qualify for the cheaper option, i.e., [<=80%] LTV. Even if the difference in the interest rates between [>80%] and [<=80%] LTVs is relatively small, it will affect you for years and cannot be easily changed so I think it works out more expensive in the end than a high interest loan for 5K which will be cleared in several months.
Still doesn't make sense?

TBH this is like robbing Peter to pay Paul.

Rainbow trout is correct. You are trying to structure a 100% mortgage. And those days are gone. And the maths doesn't make sense when you consider the reality of the mortgage process. The bank does care where your downpayment comes from. If they find out that's leverage they'll throw you out the door! If what you are suggesting is realistic and the "maths" made sense, then effectively there is an arbitrage opportunity which would have been identified and exploited a long time ago. But the mortgage underwriting process will ensure this is not the case.

Long term credit card debt is not advisable.

Also remember, when you purchase a new house you will need "wiggle" room with credit card to fit out the house with furniture and stuff. If you go down the route you are sussing out you'll be stretched to the gills. And the most important lesson I think the recession has (or should have) thought us as a nation is not to over stretch ourselves financially.

BostonB

none wrote: »

I... I think it works out more expensive in the end than a high interest loan for 5K which will be cleared in several months.
Still doesn't make sense?

If you can clear it in a few months you can save it. But you haven't. The lender needs a deposit, and a history of saving, to see if you can be financially mature. So that over the very long time of a mortgage, you will be able to maintain the loan. Its establishes a pattern of behaviour, that you'll be able to repeat. People get into trouble when they can get easy credit, too quickly, and without having to put in any effort. 100% mortagages, and loans on loans completely bypass these requirements. Then when people can't manage the loans they wonder where they went wrong.

Marry in haste, repent at leisure.