Credit union loan for house deposit

Hi, I would appreciate any thoughts or advice on this.

Would getting a credit union loan ( 20-25k) to help with house deposit be considered madness in this day and age? We have a good bit of savings in both the bank and the credit union but also need to make up shortfall between sale price of current house (which is in neg equity) and repaying existing mortgage, whilst keeping enough for deposit on new house. As it is, we would be using every penny we have, so am considering applying for loan on the strength of the savings instead. I know this was common enough practice in the boom but I'm not really borrowing for the whole deposit, more just borrowing on the strength of existing savings rather than using them all up. We do have the savings and would get approval in principal based on that and salary, but just don't want to be completely wiped out which we would be. Does anyone borrow from the CU on the strength of savings for this reason anymore? Thanks for any replies.

As I understand it you have the savings on deposit in the CU but rather than use these savings you are considering borrowing the money to supplement the shortfall in changing the house. If your repayment capacity is good you may well be able to afford both the mortgage and the CU loan. However, I fail to understand the logic of borrowing these funds when you already have the deposits. Why not use the deposits and then replenish them over time by saving an affordable amount each month?

Hi thanks for your reply. The reason I would borrow is that we would be using literally every penny we have for making up the shortfall on the existing mortgage and making up a deposit on a new home. I would just be wary of being left flat broke and then some unexpected expenses arise. I don't know if it seems like a crazy idea or not. We would be able to replenish the savings over time as you say, but I would just be scared of handing over our entire life savings in one go.

As I understood it CU deposits are offset against loans. i.e. you are not allowed draw on the deposits while the loan is outstanding. Is that still the case?
I accept that many people like to have a "rainy day" fund. However a good alternative is a bank OD for short term needs. I have always used a combination of OD and CC to supplement short term cash needs. it's a matter of choice really. Key issue is can you afford both loans. ie. CU loan and mortgage? If so then you may feel comfortable having the funds available, providing that you can access them if/when needed!

HI Kariba

as 44B points out, it makes little financial sense to borrow €20k @9% if you are keeping the same amount in a deposit paying 1%.

It is hard to advise without you giving more information
Current value of home
Mortgage
Type of mortgage e.g. tracker
Proposed price of new home
Amount of deposit
Amount of savings in CU
Salary

Brendan