Can Parents Take Out a Loan For My Deposit

aday

Hi,

I'm looking to buy a 2nd property for buy-to-let. Unfortunately there isn't enough equity in my residential property to cover the deposit I need and we don't have enough savings to raise the deposit ourselves.

Are their any restrictions on my parents taking out a personal loan to gift me the deposit (in lieu of future inheritance)?

When I apply for the BTL mortgage would I need to tell the lender the gifted deposit has been raised by a personal loan or are they not interested as long as it is a gift?

Any other ideas for raising deposits would also be welcome.

Thanks in advance.

Simon11

Why the need to have a BUY to let property?

They're not going to be interested in giving you a depsoit if its just a loan....

VIGILANT22

BTL is classed as in investment...."borrowing for deposit"!!!....not good.........

Cannon_Fodder

Ideas for raising a deposit; Save some income each month.

JA1000

There is nothing to stop you doing what you ask - but note the other comments

brit1234

Sounds extremely risky with falling rents, increaed void perods and falling house prices. Surely it would make more sense to do this in a few years rather than now when the economics are going to get worse.

Thrugelmir

How do your parents fund the personal loan?

[Deleted User]

Your parents using a personal loan to fund a deposit for a BTL makes absolutely no sense to me. What sort of rate will they be paying on the loan and won't the cost of servicing the loan eat into any other inheritance money that may come your way later?
On top of that you have little equity in your current property and little savings. Seems far too risky a proposition if you ask me. What happens when property prices fall another 20%?

cashbackproblems

How much is the loan? This is something i did for a BTL but took out the deposit myself and as long as you/parents can afford the monthly repayments theres nothing wrong with doing this as it gets you the property sooner and building up that equity through rent. House prices are not going to drop much further so nows the perfect time.

I borrowed 5k from barclays and monthly repayments are only £150

[Deleted User]

cashbackproblems wrote: »

House prices are not going to drop much further so nows the perfect time.

Really? How do you know that?
Do you really think that things will actually start to get better after the election. What do you think will be the effect of all the public sector job losses, pay freezes and higher taxes on house prices?
In addition, what happens when interest rates rise from their 200 year low?
What happens when the financial crisis enters it's next stage? There will be a next stage by the way. How do I know that? Intuition, experience, losing money and learning from it.
Now is the time to be battening down the hatches and reducing debt. This is the calm before the next storm.

leveller2911

Will people never learn..........