Solicitors antsy about parents not "gifting" deposit money

DJ_Mike

I popped in to sign contracts with my solicitors yesterday, and during the course of the conversation, they asked if any of the deposit money wasn't mine, which I said yes - my parents are helping with part of the deposit, as I simply don't have 15% of the value of the property.

However, they then caught me off guard by asking if this was a "gift", which I had no obligation to pay back, to which I said no - because in the event that I sell the house or fully pay off the mortgage, I'll pay the money back (so it isn't just gifted).

They then informed me that they were obligated to notify my mortgage lender that this was the case.

I'm a little annoyed because this now takes another 2 working days and adds yet more delays. I guess I understand their reasons for doing it.

My question is: Is Abbey likely to turn down my mortgage offer with this new knowledge? Are they simply going to request my parents sign a waiver which says that they won't try to claim any legal right over the property in the event of any reposession?

Any help appreciated!

catnap53

We had to do this when paying DDs deposit. She would not have afforded (on paper) to pay the mortgage and what is seen as a loan as well. Also seen as having a lower deposit and less equity in the property.

That's how it was explained to us 9 years ago, and mortgages were easier to get then.

tehone

I expect it may cause you difficulties - for the reason catnap53 has said - you've basically borrowed extra money and haven't got a (full) deposit

esmerellda

when i had my first mortgage my deposit was borrowed off my dad (actually it might have been a gift cause I dont think i paid him back yet and it was 19 years ago) Things were a bit less rigid then and the mortgage guy at woolwich told me to say it was gift when i ummed and ahhed about it, then my dad had to write a letter confirming this was the case.
He also had to sign to guarantee repayment of the mortgage (bless him I didnt really think about it at the time but was a bit risky for him) else i wouldnt have gotten it.

Richard_Webster

Solicitors do have a professional duty to tell lenders about loans. In most cases where it is a family thing and monthly repayments are not required the lenders will be happy to proceed.

I suppose the point is that the lender could have decided to lend you the money partly on the basis that you were sensible and prudent people who had saved the difference between the mortgage and the purchase price and the fact that you had not done so could affect their decision to lend.

On the same basis it could be argued that a gift with no obligation to pay back ought to be revealed. An exchange of contracts for a client of mine has been held up for a few days while another solicitor checks that a lender does not object to a gift from parents. They didn't and we should exchange today! I and the other solicitor in the chain thought this was taking things too far.

waynehayes

We almost foind ourselves needing a large lump sum from family to go towards the purchase of a hpuse (before our buyer came up with the goods). Our FA phoned Abbey, who said that the person involved would need to write a letter stating that they had no financial interest in the property at all.

hampshirehippo

We've just exchanged, having had the same arrangement as the OP. The Abbey gave us the mortgage. The solicitor wrote a letter which I had to pass on to my parents. My parents had to write a letter to the effect that they had no interest in the property (I presume to confirm that they don't believe that they own10% of the house).

DJ_Mike

Thank-you all for your useful responses!! That last one especially puts me sound that things will be fine - just more delays in getting there! Arg!

My parents live 30 mins away from the solicitors - they're happy to pop in with any needed correspondence to save on sending letters back and forth over days! Hopefully my solicitors will be happy with that!

Slowly getting there!

trumpton

Our lender had a gifted deposit form that your parents sign so I would ask for that, then the wording is exactly right. As an earlier poster said it's just to confirm that they have no financial interest in the house, even though you are planning to pay them back. They may also ask for a copy of the bank statement showing that they actually have the money.