Gift from parents?

ps124

Hi All,

I need some advice. I live with my wife and parents in our family home. I plan to live with them in the future too. Its currently too small for us so we are buying a bigger place. My parents are in their 50's. We have all agreed that my parents will sell the existing house which they own jointly, give me the money as a gift, and i use that as a deposit on the new house which will be in mine and my wife's name.

Upon completion of the sale of his existing house, he would make a statement to say that he will give me the money as a gift.

All was ok until i found out that the lender will not allow them to live in the same house if this was the case as they believe it to be an interest in the property.

Is there anything I can do here? Anyone know if there's a way around this? Any help would be much appreciated.

hcb42

cant they co own it?

Friends of mine did the same thing - not sure on the ownership details though.

ps124

Hi, no because I would have to re-apply for the mortgage and apparently it would make the situation complicated. I thought it was all ok to do this considering my parents are signing a statement to say they have no interest in the money and that I can do what I please with it.

Also, everyone living in the new house over 17yrs of age has to sign an agreement to say that should I not pay the mortgage, I could be thrown out and they will also have to vacate etc. etc.

So what seems to be the problem here for the lender? How can I get around it?

Thrugelmir

ps124 wrote: »

All was ok until i found out that the lender will not allow them to live in the same house if this was the case as they believe it to be an interest in the property.

In a wider context this is applies to. The HMRC would not view the money as a gift.

CLAPTON

Whilst I feel there are many reasons for not doing this, why can't you get a mortgage with all four of you on the mortgage?

Trying_to_be_good

It can't be considered as a gift if they are going to live in the house - the authorities will define it as 'depriving themsleves of an asset' if they ever need care etc, it is tax avoidance/evasion for inheritance tax etc.

Hence your parents would still be considered as having a claim on the property, so the lender is not looking forward at straightforward lending to the owner/residents.

Someone who properly knows the legal stuff can tell you more, I'm surprised your solicitor and mortgage broker hasn't already picked up on this?

Mojisola

ps124 wrote: »

I need some advice. I live with my wife and parents in our family home. I plan to live with them in the future too. Its currently too small for us so we are buying a bigger place. My parents are in their 50's. We have all agreed that my parents will sell the existing house which they own jointly, give me the money as a gift, and i use that as a deposit on the new house which will be in mine and my wife's name.

Have your parents taken legal advice on this? There are a lot of disadvantages for them. At worst, they could end up homeless.

ps124

Woh woh woh...theres alot of negative replies here and its kind of stressful reading it that way! Im not trying to avoid paying anything, and my parents know what they are doing. Solictor said that should be fine that they are doing it as long as my parents are aware of the implications. Its purely their money and no one has forced them into it. I come from the culture where this is kind of act is common and I am responsible for the welfare of my parents.

I have been through all of this already and im not seeking any advice about my parents etc.

Im only seeking advice/guidance with how to resolve this issue with the lender and my parents living at the same address. I do appreciate the fact that people have offered advice, but please could we try to stay with the problem?

thanks

ps124

trying to be good...

Thats interesting. But surely the statement that says they have no interest in the money they have given as a gift should satisfy the lender's concerns?

Thrugelmir

ps124 wrote: »

Thats interesting. But surely the statement that says they have no interest in the money they have given as a gift should satisfy the lender's concerns?

That misses the point. The money may not be viewed as a gift by other parties such as the HMRC for example. So technically the money could still be viewed as belonging to your parents even if it is invested in the property.

Passing the money to you and writing a letter does not absolve them.

CLAPTON

you haven't answered the simple question of why can't you all be on the mortgage?