Taking Out a Mortgage Deposit Loan

Taking out a mortgage deposit loan is frustrating but necessary if you want to be in the position to buy your own home. The credit crunch and economic down turn has left lenders stricter than ever about whom they give a mortgage too. The 100% mortgage was abolished in 2008, and now most lenders require at least a 25% deposit from its mortgage borrowers. If you consider this is £25,000 on a £100,000 mortgage, it is no wonder people are turning to a mortgage deposit loan to fund it.

If you have any savings you should consider using as much of those as possible to go with your deposit, this will save money on interest payments in the long run, as well as reduce the amount you need to borrow. Most high-street lenders will lend up to £25,000 unsecured, as long as the person's credit is good. Whatever you need to borrow, you need to remember to add the repayment figure to your mortgage repayment figure each month so you are not caught out if you are strapped for cash.

Lloyds TSB offer some great incentives for people considering taking out an unsecured loan to pay for their mortgage deposit. With unsecured loans available up to £25,000, they also have the option to "top-up" your repayments when you can. This means if you are financially better off during any period of the loan, you can pay extra on top of your repayment and bring the outstanding amount down. On the opposite side, they also offer repayment holidays of up to six months if you ever experience financial hardship.

Santander also offers borrowers the chance to loan up to £25,000 unsecured. Their interest rate is competitive, with the average being around 8.9% APR for loans between £7,500 and £25,000. They also offer repayment top-ups and holidays. These sorts of incentives could be the deciding factor when choosing a mortgage deposit loan, as you do not want to overstretch yourself financially.

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