Hi

My husband and i have recently found a property where the vendor is offering to pay a 5% cash back deposit and £500 legal fees on a sale price of £125,000.00

The morgate we are looking at is a 90% mortgage with a 5% unsecured loan added and the vendors depoit. However the property is currently on the market at £119,950.00 with no gift deposit. Would this effect the mortgage if we apply for it, and if so, what would the problems likely to be?

Our mortgage advisor has suggested that we could also apply for a 95% mortgage with a 5% unsecured loan added to the mortgage, this would be on an offer at £119,950.00 with no gift deposit. Given the current mortgage market, is this a real option? It would also be worth mentioning that we have no available deposit of our own.

Any advise is greatly appreciated as this is all so complicated to us.

Saffa,

To be honest with you, this tends to be a thing of the past! 2 Problems with this. The first being that lenders are very unlikely to allow this option as they have really tightened up on this kind of thing in the last few months. The property would also have to value up to the full market value of £125k. Lenders will normally only do the vendor gifted deposit if they are a member of your family.

Also, where is the unsecured loan coming from? As to my knowledge, no mortgage lenders are doing this scheme anymore. This would probably have to be sourced seperately from a bank. When you go for the loan seperately, the lender cannot know its purpose and the majority will not allow a personal loan to be used to fund any kind of business or property deposit.

My overall feeling on this is that it will fail miserably on all hurdles. If you are going to try it, make sure you dont spend out any money in the initial stages. It would be interesting to know which lender your adviser knows that will still lend 95% secured and 5% unsecured together....

Best of Luck

halifax and bos will accept 5% vendor gifted deposit.

Thank you both for your response, there is definately some food for though there.

May i just ask, who/ what is bos?

bos are bank of scotland.

Halifax will allow you to get a mortgage for 95%, so you could use the vendor's deposit of 5% as your only form of deposit. Only downside is you will be tied onto quite a high rate for a minimum of 3 years, and will also have to incur a higher lending charge when taking the mortgage out.