5 replies to this topic

[zatoichi]

I'm seeing a few loans with 'House deposit' as the purpose.

I thought mortgage providers didn't allow this? For example if they think that a borrower should only get a 90% mortgage - the borrower should have the 10% deposit - not borrow it from elsewhere?

[figures18]

zatoichi, on 28 January 2012 - 19:44, said:

I'm seeing a few loans with 'House deposit' as the purpose.

I don't think it's a problem, borrow from Zopa or Mum and Dad is there a difference as long as the 10% gets put down in 'cash'.  Loans for house deposits on Zopa come up quite often but there again who's to say that's really what they want it for  

[CKemahli]

Banks generally do not want you to be in more debt than the value of your assets, but nothing to stop your mum getting a Zopa and simply handing over the money to you and asking for the payments every month.

[MikeS1531]

zatoichi, on 28 January 2012 - 19:44, said:

I'm seeing a few loans with 'House deposit' as the purpose.

I thought mortgage providers didn't allow this? For example if they think that a borrower should only get a 90% mortgage - the borrower should have the 10% deposit - not borrow it from elsewhere?

This shouldn't be a problem as long as the house buyer discloses that they have -- or will have -- the Zopa loan when they apply for their mortgage.  If the mortgage provider thinks that all the borrower can afford to repay is a 90% loan then they'll look at the 10% Zopa loan and only offer the borrower an 80% mortgage.  (Or possibly even less because the payments on a Zopa loan would be greater than borrowing the same amount on the mortgage.)  If, on the other hand, the mortgage provider is happy that the borrower has enough income to afford both a 90% mortgage and the Zopa loan then they'd approve the 90% mortgage.  (The reason the mortgage provider wouldn't want to give a 100% mortgage is that if the borrower stopped paying they want to be able to repossess an asset that they can sell for enough to cover what they've lent.  With a 90% mortgage plus a 10% Zopa loan, the mortgage provider has the security they want.  If the borrower stops paying the mortgage, the mortgage provider is OK -- it's the Zopa lenders who would suffer.)

[elljay]

CKemahli, on 28 January 2012 - 20:04, said:

nothing to stop your mum getting a Zopa...

Wow, that was quick!  How long did it take Hoover?  

[propman]

CKemahli, on 28 January 2012 - 20:04, said:

Banks generally do not want you to be in more debt than the value of your assets...

You have a much higher opinion of banks than most these days! As discussed on Zopa before, it is very difficult to factor assets into lending unless you have security, so I would be surprised if most pay much attention to assets other than the house that they have first call on. I don't know how they assess "affordability", but strongly suspect that it is quite formulaic. When I remortgaged a few years ago, they were only willing to lend me the additional funds against my extension on consideration of the plans and quotes for the work (which at that time I was still deciding on), but they happily lent me £100k for "other" when I resubmitted (the loan to value on the unimproved house was within their requirements on a conservative valuation)!

- PM