Origin of the deposit

matt9713

Hi all,

I was supposed to exchange contracts last week as FTB. The solicitor is now saying that because I mentioned the my parents have helped me with the deposit, I cannot exchange until they've had confirmation from my lender (HSBC) that this is OK.

I'm concnerned that this will be a problem, and that HSBC will turn round and pull the mortgage offer and we're going to lose the house. Although the money from the deposit has come from my parents, it's been sitting in my own ISA for a number of years. The money wasn't put in there as a lump sum, they've contributed to it over the last few years. Last week, in anticipation of exchanging contracts I transferred it to my current account. I'm now losing interest on this as you can imagine.

HSBC were contacted 2 weeks ago about this, and despite me chasing it up they are yet to send a letter of confirmation to my solicitor. The solicitor is refusing to exchange until this is sorted, and the vendor seems to be getting twitchy.

I can't understand how this is such an issue. All deposits have to come from somewhere. If the deposit came from my own savings, it orginally came from my employers, would they have to get comfirmation from them?!

I guess there isn't much more I can do, but in your experience, do lenders every take issue when the deposit is coming from family?

Cheers, Matt

tbs624

matt9713 wrote: »

.. do lenders every take issue when the deposit is coming from family?

Was the financial help that your family gave towards your deposit a gift or a loan?

matt9713

A gift. The only condition was that we drew up a Decleration of Trust to say that in the event we sold the property, we would pay them back the money if there is any equity left after the mortgage has been repayed. The solicitor was also supposed to get permission for this over 2 weeks ago and still hasn't got confirmation. After speaking to my parents they are happy not to write anything into the agreement and are willing just to give us the money. They wouldn't require paying back on a monthly basis, so it bears no relevence on us not being able to pay back the mortgage. We have no other debt at all between us, and our repayments are supposed to be £615pcm and our combined take home pay is £2550.

sarah_elton

Just as a note of reassurance, HSBC were pretty laid back on lending standards when I got my mortgage a few years ago. Even in the very different climate now, given the size of the mortgage repayments versus your take home pay, I'm sure they'll be fine with it. I suspect they just want to know if it was a loan and you'd be making repayments, which would affect affordability. Since there's no impact on your monthly outgoings, I'm sure you'll be ok.

If your solicitor is slowing things down maybe try calling HSBC's mortgage service centre yourself? I've always found them pretty helpful.

matt9713

Thanks for the advice, we've tried doing that a couple of times but it seems impossible to actually get either HSBC or the solicitor to actually make direct contact with each other. I feel so frustrated as it seems like I'm doing all the chasing and sorting out, when it's the solicitor who is being paid by me to do all this. The EA has always been really helpful (obviously due to the commission she's going to get when it all goes through) but it's still handy to have someone who actually pulls their finger out for you.

If I had never mentioned the fact that the money once came from my parents years ago, we wouldn't be in this position, and we'd have exchanged by now.

andrewmp

You should have just said the deposit was funded by your own savings.

poppysarah

andrewmp wrote: »

You should have just said the deposit was funded by your own savings.

Or actually saved it yourself?

Premier_2

matt9713 wrote:

... Although the money from the deposit has come from my parents, it's been sitting in my own ISA for a number of years. The money wasn't put in there as a lump sum, they've contributed to it over the last few years. ...

Let's hope the tax man doesn't find out :eek:

Ref: The Individual Savings Account regulations 1998, 12(3)c

(3) An application shall provide for a declaration by the applicant that -
...
(c) all cash subscriptions made, and to be made, to the account are the applicant's cash;

http://www.opsi.gov.uk/si/si1998/98187003.htm

andrewmp

poppysarah wrote: »

Or actually saved it yourself?

If his parents were happy/willing/able to help then nothing wrong with that. I'd ensure my kids matched at least 50% of whatever I gave them though to give them some responsibility etc.

GDB2222

i suppose that it wouldn't help if I were to say that this is a great opportunity to pull out of the purchase and avoid losing a heap of money when prices drop much further, as they will?

Thought not!

BTW, I am bemused by your solicitor's views on this. I am truly surprised that he feels able to divulge this information to the lenders, let alone a duty to do so. Does what you told him contradict anything on the mortgage application form? As it currently stands, the deposit is in the form of a very soft loan. Would it help if it were converted to a simple gift and the declaration of trust torn up? There's nothing to stop you from honouring the spirit of the declaration of trust later on, without the document itself.

matt9713

I've got my own savings as well, my parents are fortunate enough to have very little financial commitments themselves and we're happy to give me the money. That gives me the stability to have my own savings tucked away for any decoration, and security that I won't have to borrow any money if anything should need replacing over the coming years.

The only issue is that the property will be jointly owned by me and my gf, hence why the Decleration of Trust needed to be drawn up.

Yes property prices will continue to fall, but we've found the right place at an affordable amount which is no more than what we pay in rent currently hence. All I want to do is get it all legally binding, and I feel it really frustrating that the solicitors are dragging their heels about this when the whole deposit is sitting in my bank account ready to go.