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

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  • 24-06-2014 10:28am
    #1
    MH4852
    Registered Users Posts: 1 ✭


    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!


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    #2
    GavMan
    Registered Users Posts: 1,919 ✭✭✭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


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    #3
    geeksauce
    Closed Accounts Posts: 826 ✭✭✭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.


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    #4
    murphaph
    Registered Users Posts: 19,022 ✭✭✭✭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.


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    #5
    ted1
    Registered Users Posts: 23,536 ✭✭✭✭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


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    #6
    miss no stars
    Closed Accounts Posts: 2,957 ✭✭✭miss no stars


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


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    #7
    jon1981
    Registered Users Posts: 4,359 ✭✭✭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?


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    #8
    miss no stars
    Closed Accounts Posts: 2,957 ✭✭✭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.


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    #9
    jon1981
    Registered Users Posts: 4,359 ✭✭✭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!


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    #10
    jlm29
    Registered Users Posts: 3,818 ✭✭✭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!!


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    #11
    murph226
    Registered Users Posts: 1,385 ✭✭✭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?


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    #12
    Saipanne
    Closed Accounts Posts: 4,882 ✭✭✭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


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    #13
    L1011
    Registered Users Posts: 68,910 ✭✭✭✭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.


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    #14
    Santa Cruz
    Banned (with Prison Access) Posts: 3,126 ✭✭✭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


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    #15
    L1011
    Registered Users Posts: 68,910 ✭✭✭✭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:


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    #16
    jlm29
    Registered Users Posts: 3,818 ✭✭✭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!


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    #17
    MouseTail
    Registered Users Posts: 1,663 ✭✭✭MouseTail


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


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    #18
    MrDerp
    Registered Users Posts: 991 ✭✭✭MrDerp


    miss no stars wrote: »
    What's that? Oh, 2005 called and wants you back...

    They've also asked for their put down back :p


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    #19
    ted1
    Registered Users Posts: 23,536 ✭✭✭✭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


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    #20
    cpoh1
    Registered Users Posts: 1,605 ✭✭✭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.


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    #21
    ted1
    Registered Users Posts: 23,536 ✭✭✭✭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.


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    #22
    murphaph
    Registered Users Posts: 19,022 ✭✭✭✭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.


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    #23
    cpoh1
    Registered Users Posts: 1,605 ✭✭✭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.


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    #24
    L1011
    Registered Users Posts: 68,910 ✭✭✭✭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?


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    #25
    ted1
    Registered Users Posts: 23,536 ✭✭✭✭ted1


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

    May 2012


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    #26
    ted1
    Registered Users Posts: 23,536 ✭✭✭✭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.


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    #27
    L1011
    Registered Users Posts: 68,910 ✭✭✭✭L1011


    ted1 wrote: »
    May 2012

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


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    #28
    miss no stars
    Closed Accounts Posts: 2,957 ✭✭✭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...


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    #29
    ted1
    Registered Users Posts: 23,536 ✭✭✭✭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.


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    #30
    quietsailor
    Registered Users Posts: 1,428 ✭✭✭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


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    #31
    miss no stars
    Closed Accounts Posts: 2,957 ✭✭✭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.


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