From: "Tim" 
Newsgroups: uk.finance
Subject: Re: loan as deposit?
Date: Thu, 17 Jun 2004 08:35:37 +0000 (UTC)

> "Tim" wrote
> > If you've already taken out the loan beforehand
> > and stashed the cash in the bank, then it *would*
> > be "coming from your own resources", wouldn't it?
>
"Doug Ramage" wrote
> I don't think that defence would fly in court.:)

OK then, where do you draw the line?  Every person's financial position is
(usually) a mixture of assets (eg houses, cars, bank balances) and
liabilities (eg loans).

Suppose you have £20,000 in the bank and want to buy *both* a car costing
£20,000 and a house which needs a deposit of £20,000.
You take out a (personal) loan for £20,000 and place this in the bank,
giving a balance of £40,000.
You now buy the car, and sign the application for a mortgage which requires
"confirmation that the deposit is coming from your own resources" - is this
acceptable?  You have the extra £20,000 in the bank at the time of purchase
of the house, *only* because you recently took out the personal loan ...

The point is that, really, you cannot say that "the house deposit was paid
from the initial bank balance and the car was paid for from the loan" any
more than "the house deposit was paid from the loan and the car was paid for
from the initial bank balance".