Is taking out a personal loan for house deposit a good idea?

MH4852

Hi,Is taking out a personal loan from credit union a good idea to get deposit required for a house?The price of house would be looking to buy would be circa 130k so on a 10% deposit would require 13,000 deposit.Personal savings of 3k so loan would be 10k. want to know before applying for mortgage.We have had personal loans of circa 10k in past and have repaid no problem while paying rent of circa 450 per month.Personal circumstances have not changed since then.Any advice would be appreciated!

GavMan

No, it's absolutely not a good idea.

Plus, the bank will want to know where the 10k came from because you'll have no record of saving it

geeksauce

Chances are the bank will tell you to clear any loans you have before giving you the mortgage, I know I had to clear my car loan before they gave me one and that was only 10% of what you are looking for.

Any loan you are repaying will affect your borrowing capacity for your mortgage and that would all be assessed at the time of making the mortgage application. Having savings of 13k plus would also show that you are pretty good with money and somewhat of a safe bet in the eyes of the bank.

Plus you would need money for legal fees, stamp duty etc.

murphaph

Can you really afford to buy a house if you have only managed to save 3k with fairly low rent? Is money tight, or are you just spending it on stuff you don't really need? You have to ask these questions of yourself.

Under no circumstances is it god (or eve possible these days) to get a loan to use as a deposit. The bank will want to know where the deposit came from for a start. They want to see solid saving and to be frank, 3k isn't solid saving.

ted1

Didn't the government just announce a scheme to help people like yourself who can afford a mortgage but struggle to get the initial deposit because your paying rent.

Look into and this may be a better option

http://m.independent.ie/business/personal-finance/property-mortgages/easy-mortgages-for-firsttime-buyers-are-on-the-way-30268023.html

miss no stars

What's that? Oh, 2005 called and wants you back...

jon1981

OP, the idea of a deposit is prove you can save/generate cash and also take on some risk in the purchase. If the bank were to give you a loan for the deposit and a mortgage for the remainder it would be taking on 100% of the risk. See the logic?

miss no stars

jon1981 wrote: »

OP, the idea of a deposit is prove you can save/generate cash and also take on some risk in the purchase. If the bank were to give you a loan for the deposit and a mortgage for the remainder it would be taking on 100% of the risk. See the logic?

Not just that, but it leaves you in a better position. If you have a 100% mortgage (or 80%-20% mortgage-loan) you have no equity and it'll be a long time before you do have equity. If things go face up for you, having equity means you can sell, clear the loan and move on. If you have no equity you can't sell, the debt will continue to be there and you're in much bigger do-do.

jon1981

miss no stars wrote: »

Not just that, but it leaves you in a better position. If you have a 100% mortgage (or 80%-20% mortgage-loan) you have no equity and it'll be a long time before you do have equity. If things go face up for you, having equity means you can sell, clear the loan and move on. If you have no equity you can't sell, the debt will continue to be there and you're in much bigger do-do.

Very important point, can't believe I didn't highlight this. I think a lot of people see past this!

jlm29

Bank will check to see do you have a credit union loan. They used not be able to find out about CU loans, but can now. Which is no harm. Plenty people lied about where their deposits came from back in the day, but no more!!

murph226

jlm29 wrote: »

Bank will check to see do you have a credit union loan. They used not be able to find out about CU loans, but can now. Which is no harm. Plenty people lied about where their deposits came from back in the day, but no more!!

What exactly has changed to allow the banks to do this?

Saipanne

jlm29 wrote: »

Bank will check to see do you have a credit union loan. They used not be able to find out about CU loans, but can now. Which is no harm. Plenty people lied about where their deposits came from back in the day, but no more!!

Lol

L1011

murph226 wrote: »

What exactly has changed to allow the banks to do this?

More and more CUs are joining the ICB, mainly as people in serious trouble are often going to CUs to get loans assuming they are unable to know about the five bank loans and 20k on credit cards.

OP - no, its a horrendous idea and if you tell the bank you'll be refused outright; if you lie and get found out as lying you'll have more serious issues.

Santa Cruz

GavMan wrote: »

No, it's absolutely not a good idea.

Plus, the bank will want to know where the 10k came from because you'll have no record of saving it

Well the old "I won it on the horses" trick is always worth a shot

L1011

Santa Cruz wrote: »

Well the old "I won it on the horses" trick is always worth a shot

I'm pretty certain that gambling winnings were one of the things I had to provide proof my cash wasn't from, that and the underwriters don't like it either. But if you're Bertie sure what need do you have for underwriting rules :pac:

jlm29

MYOB wrote: »

More and more CUs are joining the ICB, mainly as people in serious trouble are often going to CUs to get loans assuming they are unable to know about the five bank loans and 20k on credit cards.

OP - no, its a horrendous idea and if you tell the bank you'll be refused outright; if you lie and get found out as lying you'll have more serious issues.

Thanks for that... I knew I was told a couple of years ago by someone in the cu, but I couldn't remember the reasons!

MouseTail

To add, as well as €13k deposit, you will need at least another €5k to cover legal and surveying fees and stamp duty.

MrDerp

miss no stars wrote: »

What's that? Oh, 2005 called and wants you back...

They've also asked for their put down back

ted1

MouseTail wrote: »

To add, as well as €13k deposit, you will need at least another €5k to cover legal and surveying fees and stamp duty.

5k is to much.
1% stamp duty, 1k solicters , 150 survey.

No where near 5k

cpoh1

ted1 wrote: »

5k is to much.
1% stamp duty, 1k solicters , 150 survey.

No where near 5k

All potentially feasable but highly unlikely. You get what you pay for at the end of the day and anyone who skimps or goes for the cheapest solicitor to save a few bob is a fool.

A decent solicitor will cost a minimum of €1,500, an evaluation for the bank for your mortgage will cost you €150, Survey €400 (and thats with no follow-ons or issues).

You wont have much change of €5k after all that including stamp duty.

Posts like the original OP scare the crap out of me to be honest. Someone who cant even manage to save a €15k deposit has no business buying a house, there's only one way interest rates can go. Any kind of shock factor to the economy and you are in very sketchy territory.

ted1

cpoh1 wrote: »

Posts like the original OP scare the crap out of me to be honest. Someone who cant even manage to save a €15k deposit has no business buying a house, there's only one way interest rates can go. Any kind of shock factor to the economy and you are in very sketchy territory.

I disagree someone living with their parents paying little to no rent can save 15k but someone paying market rate may have trouble saving 15 k. The person paying rent could with all probability be a safer bet for the bank.

As regards solicters, I strongly disagree with you there.

murphaph

ted1 wrote: »

I disagree someone living with their parents paying little to no rent can save 15k but someone paying market rate may have trouble saving 15 k.

Ah come on ted. A couple should be able to save 15k rent or no rent and if that means sacrificing for a while then so be it. People here pay rent and banks won't look at them if they don't have a decent deposit of around 20% with exceptions only made for certain professions who can get 100% mortgages due to their almost guaranteed income.

cpoh1

ted1 wrote: »

I disagree someone living with their parents paying little to no rent can save 15k but someone paying market rate may have trouble saving 15 k. The person paying rent could with all probability be a safer bet for the bank.

I dont care about people living with parents, were talking about a specific case like the OPs.

If they have trouble scraping 15k together over a few years (thats €600 a month for ~2 years) how are they going to manage a 1-2% increase in interest rates? What if they have another child? What if one of them gets ill (no illwill intended!) and ends up on disability? What if the car craps out and they need an upgrade?

These are all very small things but when you are sailing close to the wind and cant save even a small amount a month then you have no business taking on a risk like a mortgage. Like someone said its like 2006 all over again.

L1011

ted1 wrote: »

5k is to much.
1% stamp duty, 1k solicters , 150 survey.

No where near 5k

Been a while since you paid a.surveyor or land registry fees I take it?

ted1

MYOB wrote: »

Been a while since you paid a.surveyor or land registry fees I take it?

May 2012

ted1

cpoh1 wrote: »

I dont care about people living with parents, were talking about a specific case like the OPs.

If they have trouble scraping 15k together over a few years (thats €600 a month for ~2 years) how are they going to manage a 1-2% increase in interest rates? What if they have another child? What if one of them gets ill (no illwill intended!) and ends up on disability? What if the car craps out and they need an upgrade?

These are all very small things but when you are sailing close to the wind and cant save even a small amount a month then you have no business taking on a risk like a mortgage. Like someone said its like 2006 all over again.

the OP is looking for a mortgage of 130,000 (@100% mortgage)that's about €650 a month, they are currently paying 450 in rent.

you expect them to save 600 + pay rent of 450. That's €1050 a month.

a 1-2% increase would not equate to them needing an extra 400 euro a month.

generally a mortgage should a 1/3 of disposal cash. you expect them to allocate 53% of the disposal cash to rent and deposit.

also as the OP said they have just paid back a 10k loan. Ths will free up some additional cash.

L1011

ted1 wrote: »

May 2012

Land Registry alone has gone up significantly since then; 150 for a surveyor suggests nixer at best.

miss no stars

MYOB wrote: »

Land Registry alone has gone up significantly since then; 150 for a surveyor suggests nixer at best.

150 for a survey couldn't be anything other than a nixer or rubbish. Nobody works properly that cheaply. The CCTV check done on the underground drainage costs €250...

ted1

miss no stars wrote: »

The CCTV check done on the underground drainage costs €250...

Would you like fries with that?

please explain why you feel that there is a need for a CCTV check on the drains.

quietsailor

ted1 wrote: »

Would you like fries with that?

please explain why you feel that there is a need for a CCTV check on the drains.

So you don't get hit with a massive repair bill when they need to be replaced??? It seems to be standard around Cork where there are a lot of the old caly pipe drains.

Stands to reason it'll be a good idea in any old house

miss no stars

ted1 wrote: »

Would you like fries with that?

please explain why you feel that there is a need for a CCTV check on the drains.

wtf is that about?


There is a real need to do a CCTV check on the drains. They're buried, you can't see them, you can't check them in any other way. There is literally no other way of knowing - whatsoever - what's down there. Did one on a house just last week, next to no problems with the house, recent build, drains were fecked and it's gonna cost a bit to put it right. I'd want to know if there'll be sewage flowing onto my lawn sometime soon, wouldn't you? If there's a serious blockage the pipes can become damaged and need repair. That's a hell of a big job. If you can't afford €250 to make sure that one of the most important services to the house is at least in working order you can't afford the house you're buying.

miss no stars

ted1 wrote: »

exactly, you tailor it to the age of the house. Miss No Stars was implying that it should be standard.

Lots of people always go for the unnecessary upsale like Currys extended warranty etc

Read what I just wrote. House built in 2010. Serious problems with the drains. No problems with the house, no reports of problems from the owners with the drains, nothing to hint that anything might be amiss but serious damage all the same that will cause problems down the line.

userod

miss no stars wrote: »

wtf is that about?


There is a real need to do a CCTV check on the drains. They're buried, you can't see them, you can't check them in any other way. There is literally no other way of knowing - whatsoever - what's down there. Did one on a house just last week, next to no problems with the house, recent build, drains were fecked and it's gonna cost a bit to put it right. I'd want to know if there'll be sewage flowing onto my lawn sometime soon, wouldn't you? If there's a serious blockage the pipes can become damaged and need repair. That's a hell of a big job. If you can't afford €250 to make sure that one of the most important services to the house is at least in working order you can't afford the house you're buying.

CCTV checking the drains on a house is overkill.

Perhaps we should also invite a team of tree surgeons to see how finely the wood in the house is ageing.

miss no stars

userod wrote: »

CCTV checking the drains on a house is overkill.

Perhaps we should also invite a team of tree surgeons to see how finely the wood in the house is ageing.

Is that in your professional opinion or personal opinion?

ted1

miss no stars wrote: »

Is that in your professional opinion or personal opinion?

A tree surgeons professional opinion would recommend that the trees should be checked.

The problem with professional opinions is that they are the ones with a vested interest.

miss no stars

ted1 wrote: »

A tree surgeons professional opinion would recommend that the trees should be checked.

The problem with professional opinions is that they are the ones with a vested interest.

Yup, and I don't carry out CCTV surveys for a living so I don't have any vested interest. My interest lies in making sure the prospective purchaser knows what they're buying and is made aware of any issues, including issues with the drainage (or at least made aware that they should get a CCTV survey done to check for issues).


The thing is, people are now really acutely aware that there can be problems with modern-builds. There's been enough crap structure, poor detailing, poor soundproofing and then massive pyrites problems that people seem to be aware that not every building is going to be okay. But why would you limit that to above ground parts of the property? Why would one assume that everything below ground has been constructed perfectly and maintained perfectly by the current owners and then in the same breath hire someone to check the above ground works?

cpoh1

userod wrote: »

CCTV checking the drains on a house is overkill.

Perhaps we should also invite a team of tree surgeons to see how finely the wood in the house is ageing.

The main reason people end up with "subsidence" problems in Ireland is because of issues with damaged drains leaking fluids into the surrounding soil, softening it up and causing reduction in the shear strength weakening foundations and causing cracks in the structure of the house (usually the last and most expensive symptom to fix). Old style clay pipes are normally the root cause, in areas of limestone, any flex or movement in the pipes leads to them breaking and combined with shallow foundations on older houses the chain reaction sets off. In newer builds during celtic tiger times excavation areas werent allowed to settle leading to damage pvc pipes also, its more common than you think. So yeah a survey on your pipework is pretty important.

When I bought my house early last year I had a damp/wood expert in to inspect the attic wood and basement, the house was built in the 50's and although all looked good I wanted to make sure it would be ok for another 50 years after we moved in. He found some early woodworm infestations in obscure locations in the attic which I treated once we bought.

But sure €150 will cover all you need, because houses are a small investment after all. You'd spend more than that on a mechanic looking over a car :rolleyes:

cpoh1

ted1 wrote: »

the OP is looking for a mortgage of 130,000 (@100% mortgage)that's about €650 a month, they are currently paying 450 in rent.

So they cant manage to save any money at all with their current scenario yet you are ok with them not only

1. getting a loan for a deposit they cant save increasing monthly outgoings
2. Increasing their monthly payments for accomodation by 33%

They have no disposable income at all for savings yet you think they should add a loan and higher mortgage repayments compared to their current rent to the mix. And that is with variable rates as low as they are about to go and with no security for any changes in the future.

I just cant make my mind up if you are serious (and deluded) or a very good wind-up merchant (in which case I tip my hat in your direction good sir).

nick 56

Do you ever wonder where all the talk of repossession, negative equity etc that has been in the papers over the last few years came from.

When i was working as a plumber i was freaked by the number of people who would get 4 or so years old bathrooms ripped out and replaced with the latest fashion.

Extensions, new windows, bigger houses etc. Often this would be financed not by the "evil" banks but by the local credit union.

Yes its hard to realise you should have started on the house buying / money road earlier but you will have to start now!

Save up. , preferably with the bank that you will approach for the mortgage. If you change your mind you can always have a spree.

Reading back on my text i sound like a pompous prat but dont make the mistake i made , it took me years to recover .

The_Morrigan

Folks can you cut out the squabbling and get back on topic.

dockleaf

Land registry fees alone on the purchase:

1. Transfer fee €600
2. Fee to register mortgage €175
3. Fee to obtain folio on completion €5.

Total (bare minimum) €680.

OP will also have to pay search fees of somewhere between €75 to €150 depending on title, commissioner for oaths fees for swearing documentation approx €40. If they want a planning search somewhere between €150 to €200. Total outlays alone, excluding solicitors fees coming in about €1000 give or take a bit and these are bare minimum assuming title in order. Solicitors fees are probably going to be somewhere between €950 to €1500 plus VAT at 23% depending on where you go. Might even be able to get solicitors fees for less but always wise to go for someone recommended if possible.

cpoh1

dockleaf wrote: »

Land registry fees alone on the purchase:

1. Transfer fee €600
2. Fee to register mortgage €175
3. Fee to obtain folio on completion €5.

Total (bare minimum) €680.

OP will also have to pay search fees of somewhere between €75 to €150 depending on title, commissioner for oaths fees for swearing documentation approx €40. If they want a planning search somewhere between €150 to €200. Total outlays alone, excluding solicitors fees coming in about €1000 give or take a bit and these are bare minimum assuming title in order. Solicitors fees are probably going to be somewhere between €950 to €1500 plus VAT at 23% depending on where you go. Might even be able to get solicitors fees for less but always wise to go for someone recommended if possible.

So about €1000 so for the whole lot is what we are saying yeah

kellygav

Using the best quote I got in the market for a solicitor:

Professional fee (Solicitor Fee): €900
Plus VAT: €207

Land Registry fees for registration of Lease / Transfer: €700
Land Registry fees for registration of mortgage deed (if applicable): €175
Land Registry fee for obtaining copy folio and map: €5

Fees to law searchers: €65
Commissioners fees (if applicable): €20

Stamp duty @ 1% (The house mentioned was €130K): €1,300

Total Price approx: €3,372

ted1

kellygav wrote: »

Using the best quote I got in the market for a solicitor:

Professional fee (Solicitor Fee): €900
Plus VAT: €207

Land Registry fees for registration of Lease / Transfer: €700
Land Registry fees for registration of mortgage deed (if applicable): €175
Land Registry fee for obtaining copy folio and map: €5

Fees to law searchers: €65
Commissioners fees (if applicable): €20

Stamp duty @ 1% (The house mentioned was €130K): €1,300

Total Price approx: €3,372

Which is much closer to my €2450 as oppose to mousetails "at least 5k"

HeyArnold320

Does anyone know how the banks would look on say, 15k saved up through your banks savings and 15k you have inherrited from a family member for a 30k deposit. Would they accept this or would you need to save up the 30k yourself?

miss no stars

ted1 wrote: »

Which is much closer to my €2450 as oppose to mousetails "at least 5k"

Actually it's closer to the 5k once you add in the survey costs.

NewCorkLad

HeyArnold320 wrote: »

Does anyone know how the banks would look on say, 15k saved up through your banks savings and 15k you have inherrited from a family member for a 30k deposit. Would they accept this or would you need to save up the 30k yourself?

That shouldn't matter as long as you can meet the repayments with the usual stress testing taken into account.

As regards the OPs question I would say no that is not a good idea.

MrDerp

HeyArnold320 wrote: »

Does anyone know how the banks would look on say, 15k saved up through your banks savings and 15k you have inherrited from a family member for a 30k deposit. Would they accept this or would you need to save up the 30k yourself?

I had no problem with inheritance that had been sitting in my account for some time. You need to show recent evidence of savings - 6 months worth - that's the most important part. You're deposit could be 20k gift and 10k savings as long as the savings is recent and verifiable, and you have a good reason for getting the 20k. Typically the bank look for a letter from your parents or whoever that the money is a gift with no recourse.

L1011

HeyArnold320 wrote: »

Does anyone know how the banks would look on say, 15k saved up through your banks savings and 15k you have inherrited from a family member for a 30k deposit. Would they accept this or would you need to save up the 30k yourself?

You may be asked to show the documents relating to the inheritance but once your savings per month plus rent, if paid meet the requirements it won't be an issue. Their concern is ensuring that there's no repayments or partial ownership grants required on any part of the deposit.

bluemartin

I recently got the following bill from my solicitor, it was for an old house costing 60,000

Legal services 1000 inc vat

stamp duty 600

Registry of deeds 50

Land registry on first registration 130

copy of folio and map 6.00

Law searches fees 530.90

Can anyone tell me why the law searches fees were so high

Big Cheese

That will have a negative impact on the approval chances of your mortgage. it is much better for you if you can save the money first-hard I know- as then you will have a history of being able to save something. A mortgage is a big step, don't tie more debt than absolutely necessary around your neck. However, in saying that you may want to do some calculations as to whether the amount of interest you will pay on the loan over a period is going to be more or less than the rate of increases in property prices. By the time you save 10k the house prices may have gone up 30k on average.