urgent advice appreciated

scareface1

i currently have a mortgage £130k, i am borrowing some money off my parents who are taking out a small interest only mortgage on their mortgage free property....i will pay off my parents in 2 years no problems.

i am going to port my existing mortgage to the new property i am going to buy...

my parents have seen a solicitor (rightfully so) and they want to tell my mortgage company about the arrangement....do you have to do this by law?? obviously i don't want the mortgage company knowing because it will obviously effect things etc, the reason i am not getting a loan myself is because i don't have enough equity in my current property but can easily afford to pay off the small mortgage m folks are taking on top of my exising mortgage

i will be changing my life assurance so my folks are covered if something happens to me

Pincher

If you do everything by the book you would be wearing bullet proof underwear.

Personally, I would just get the parents to gift the money to you.

Changing the beneficiary on an existing policy could be tricky.
They like to set them up as a trust, which means it's not part of your estate on death, so no need to wait for Probate, so the insurance company can pay out quickly.

You can buy extra insurance for two years. Use the money you would have spent on changing the trust, (and back again in two years time) on the premium.

You can also gift the house to your parents in your will.

I am not FSA authorised to give advice, so it's just an opinion.

Annisele

Your post could be read as "I don't want my lender to know where my deposit is coming from, because if my lender did know then it wouldn't lend me any money". If that is what you're saying, then you're trying to get money out of your mortgage lender by deception - and yep, that would be well and truly illegal, and would entirely explain why the solicitor wants the arrangement declared to the lender.

scareface1

my life insurance can be changed at the drop of a hat i've done it before, and it won't be a deposit as i'm porting my mortgage across....i'm just having a loan off my parents that i want to hide from the bank, this extra moey will be paid to bridge the extra money needed for the new house...

basically they will sell for 148k i'm sure there are loads of people who have lons off parents without telling banks etc???

MrsManda

If you are buying a house for more than your mortgage/the worth of your current house surely the mortgage company will want to know where the extra money is coming from? Which presumably means you are going to have to tell them that your parents are giving you the money to bridge the gap?
I don't know if you have to tell them that you are lending the money rather than it being gifted, will you have to sign something with your parents solicitor to say that if you die your estate will pay the money you owe?

scareface1

so basically my mortgage company will want to know where the extra £18k is coming from??

like you said, if thats the case then i'm sure my folks will just 'gift' me the money then

i'm not going to sign anything giving my folks the house, it's joint with my partner anyway, i'll just alter my life assurance so they are covered if i die