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Personal loan instead of mortgage?

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  • 15-05-2014 2:04pm
    #1
    fluffymuffy
    Registered Users Posts: 22 ✭


    My husband and I are looking to buy our first home.
    I have about €85,000 available as a deposit, permanent job earning 45,000, no debts etc etc. I can also borrow €50,000 off my mum if necessary (we would prefer not to).
    We are looking at properties about €200,000, so we have a minimum shortfall of about 65,000.

    Unfortunately my husband has just moved here (3 months ago), therefore has no credit history here, no bank account yet, isn't working and is on a stamp 4 visa.

    Obviously I have the means to pay the sort of mortgage we're asking for on my own (we have no kids yet). But even though we've stated my husband isn't working and therefore won't be contributing towards the mortgage they have still refused us because of his lack of credit history and because he is on a stamp 4 visa.

    So my question is this; would it instead be possible to take out a personal loan in just my own name over 10 years or so? Would a bank allow this much for a personal loan and would it be a problem that it is for a property?

    And before people start going on about renting and not always having to buy, go look at the rental market! There are no properties and to rent the same type of property we want to buy we would be paying double on the rent. Also there is no security in the rental market, I've had 2 friends with families turfed out of their private rented houses in the last 2 months because the owner wanted to sell, one of them came home to find a for sale sign in the garden, the owner didn't even have the decency to ring them to tell them they were selling.

    Thanks for any help.


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    #2
    dandyo
    Registered Users Posts: 103 ✭✭dandyo


    My observations would be that

    - Remember, all a mortgage is, is a loan secured against a property, taken over what is usually a 20 - 30 year period
    - The personal loan is typically un-secured, as you are not securing any collateral to be at risk should you default on the loan

    I very much doubt that a Bank will give out a 10 year loan for that amount of money, based on your current income (as I trust you will have to do this alone, as your husband has no income)
    If you are trying to negotiate the loan with the house as a security, then in reality it is a mortgage, so you are down that path again with the bank.
    You would also have to declare the sudden 50,000 that appears in your bank account, and the Bank will be looking evidence that this does not have to be paid back i.e a letter from your mum saying this is a gift - but in reality, you will have the burden of paying that back as well as the personal loan.

    Remember also, if you are lucky to get the personal loan, rates are a lot higher over the period, typically between 9 and 11 % so, whilst long term outlay will be less, you will have short term re-payments that end up much larger than mortgage repayments..

    Sorry for airing on the negative side, but if I was a Bank Manager (which thank god I aint) the maths don't work


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    #3
    fluffymuffy
    Registered Users Posts: 22 ✭fluffymuffy


    I kind of figured they might not loan me that amount.
    It's just so frustrating being refused a mortgage I'm more than capable of paying because of something we have no control over. Especially as if I had applied before I got married I would have got a mortgage no problem.

    My mum did actually say she would just give the money to us (see us using it before she goes and all that), but there is simply no way we would accept that sort of money as a gift.

    Thanks for replying dandyo.


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    #4
    dandyo
    Registered Users Posts: 103 ✭✭dandyo


    All you can do is ask, speak to a "friendly" bank manager and see what options in reality you have. Or if you there is independent financial advice out there

    At least then you will know for certain and can start planning accordingly -- another year of saving may be the best investment you ever make


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    #5
    ShowMeTheCash
    Registered Users Posts: 2,651 ✭✭✭ShowMeTheCash


    I think you would need to be out of your mind to try and get a loan in place of a mortgage.

    The interest you are probably going to get on a personal loan will be double that of a mortgage.

    If you earn 45K a year and have 85K in the bank I cannot see how they could turn you down, regardless of what your husband is doing...

    Usually banks want to see employment over a period of time.
    How long have you been working?
    Savings over a perdiod of time usually only 6 months.
    And you outgoings, if you are paying rent this should work in your favour as this will show affordability.

    That being said, if you are looking for 220 and have 85 that leaves a shortfall of 135K which is a lot for a single income of only 45K.

    Did you ask the bank how much they would give you on a mortgage?


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