Advice wanted - borrowing a significant amount form someone to fund house purchase

scooter_chick

I’m after some advice here.

I’ve been trying to sell my property for many months in order to buy somewhere else. Have had no luck with the selling so far & have seen many properties that I really would have liked to have bought come & go.

I now find myself in the very fortunate position where my boyfriend has offered to lend me the money that I’d need to buy a new place now, so that I can get on with the buying aspect without having to sell my flat. I would then pay him back when I do finally sell.

What I want to know is how best for him to give me the money? Can he just do a BACS payment into my account, or will we have to do something else in order to not fall foul of any tax/money laundering regulations? I don’t want my potential purchase to run into difficulties later because the solicitors aren’t happy about where the money has come from, nor do I want some random tax liability because someone has been kind enough to help me out.

I guess it’s a similar situation to a FTB getting deposit help from the Bank of Mum & Dad – how does it work when that happens?

Oh - and we don't currently live together, nor are we planning to with this move, it's just me selling & buying on my own.

Thanks!

pie81

As regards getting the money to you a BACS transfer should be fine. Your sols will ask where the money has come from, just tell them the truth.

The difficulty you are likely to encounter is with the mortgage co (assuming you would be taking out a mortgage). They are always nervous where the buyer's deposit is coming from a loan rather than money owned outright... Bank of Mum and Dad usually give the money rather than loan it. However as long as your boyfriend is happy to sign away any rights to repayment then it should be ok I think.

Fire_Fox

The conveyancing solicitor will need to draw up a Deed of Trust - you need to consider what happens if you split up, your boyfriend is made redundant or falls sick and needs benefits (he will have to declare the interest in your property) or you cannot sell your flat for enough to pay him back. You should ask the solicitor if he would prefer to the money to go via your current account or be paid directly into their client account.

Are you confident you can get a second mortgage even with another deposit? Your first lender may not be willing to allow you to let the first property; the new lender may not be happy that there will be a second charge on the property. Can you afford to pay two mortgages plus two lots of insurance plus service charges plus two lots of council tax? For how long? What if you get made redundant, fall pregnant unexpectedly, get injured and can't work?

If your flat isn't selling then chances are it's overpriced. Have you looked at land registry sold prices for block or street? Have you posted your RightMove link in order to get comments on the estate agents details?

princeofpounds

Get a contract drawn up by a solicitor if it's big money.

He may need to pay tax if he charges interest.

You may need to disclose the source of the money to the mortgage lender, and they may not like it if it's a loan rather than a gift of equity.

The bank should be able to advise on proper transfer methods. If speed is not the issue then you should be ok with the bog standard method.

scooter_chick

Thanks for the advice so far.

Sorry, I'm not very good at the quoting thing, so I'll answer without quoting...

Boyfriend can easily afford to lend me the money, in fact I think he'd rather GIVE it to me, but I'm not having that. So I'd use that to pay off current mortgage (which is v. low), basically as if I'd sold the current property. So no 2nd mortgage. I don't think he wants an interest in the property, so from what you're saying we might be better 'legally' calling it a gift without any paperwork, then I 'gift' it back to him later?

I'm getting plenty of interest in my property, but just not a proper offer. So I'm going to reduce the price as well, hopefully get a sale soon, so even if I have to pay 50% council tax plus insurance etc. on it if empty for a few months, that won't break the bank. EA doesn't think it's overpriced, but since it hasn't sold, I'm beginning to disagree!

Fire_Fox

For quoting you simply press the quote button if you want to quote one post. To quote multiple posts you press the " button on each post then the quote button on the last one. Took me ages to work that out!

DVardysShadow

scooter_chick wrote: »

T
Boyfriend can easily afford to lend me the money, in fact I think he'd rather GIVE it to me, but I'm not having that. So I'd use that to pay off current mortgage (which is v. low), basically as if I'd sold the current property. So no 2nd mortgage. I don't think he wants an interest in the property, so from what you're saying we might be better 'legally' calling it a gift without any paperwork, then I 'gift' it back to him later?

Why not just transfer the flat to him while you continue to market it for sale? If he would rather give you the money, he is not going to be too put out about the prospect of a small loss or a small profit on the deal.

scooter_chick

DVardysShadow wrote: »

Why not just transfer the flat to him while you continue to market it for sale? If he would rather give you the money, he is not going to be too put out about the prospect of a small loss or a small profit on the deal.

Hmmm... If I transferred it to him, wouldn't that incurr legal costs & stamp duty? And if he 'owns' it, but my name is on the HIP etc, then how would that work when real buyer comes along? Also it's a leasehold, which I assume would make something like that more complicated as the freeholder would need to get involved with a transfer.

It sounds very simple when you say it, but surely there must be more to it than that?

DVardysShadow

scooter_chick wrote: »

Hmmm... If I transferred it to him, wouldn't that incurr legal costs & stamp duty? And if he 'owns' it, but my name is on the HIP etc, then how would that work when real buyer comes along? Also it's a leasehold, which I assume would make something like that more complicated as the freeholder would need to get involved with a transfer.

It sounds very simple when you say it, but surely there must be more to it than that?

OK, there will be legal costs, but it is better than the difficulties you could have over a mortgage. Maybe you need to be a little creative. A contract for sale with 90% deposit on exchange and no set date for completion. Sell, set aside contract, proceed normally.