Borrowers Considering Loans to Provide Deposit

Fri, 17 Jul 2009

A poll on a financial comparison website has revealed that one in six first time buyers would consider taking out a personal loan to act as a deposit on a house . 16 per cent of respondents indicated such a willingness to take on the extra debt of a personal loan, despite warnings of borrowers finding themselves in negative equity following excessive borrowing and a decline in property prices .

Seven per cent of respondents revealed they had taken out a loan to cover their deposit, against the advice of financial experts. Any mortgage lender who knows that a deposit is being sourced from a loan will instantly reject the application, as the lender is effectively taking out a 100 per cent mortgage . The poll also revealed the difficulty young people have in being able to afford a house, with just 13 per cent of under 35s looking to buy a property .

Amongst those looking to buy, a 52 per cent majority said they have been or will be saving up a deposit, whilst others had alternative means of raising the necessary funds. 18 per cent said they would turn to a bank or their parents for the money, 6 per cent said they would await the return of 100 per cent mortgages, whilst a further 6 per cent said they were playing the lottery.
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