Large "deposit"

Jaikagen

Sorry, another question lol.

Does a large deposit make a mortgage easier to get? Does it matter if that large deposit comes from a family member? To the level of needing a 25% mortgage on a £240k house.

bchilds

The bigger the deposit the better! It doesn't matter that a large amount is a gift, this just needs to be proved to the mortgage lender.

Jaikagen

So even though my credit rating isnt the best, the deposit amount should halp that?

holly_hobby

A gifted deposit from a family member - is not normally an issue but we are normallly talking around 10% - from your post your situation is somewhat different, in that it appears that the "family" gift is circa 180K !!!! (i.e you say you will need a LTV of just 25% on 240K.

Firstly lucky you ... generally the way a lender will deal with this is to have the family member provide a legal disclaimer, whereby they confirm the gift of 180k is made without reservation (i.e no requirement for the monies to be repaid, and confirmation that it has not been given in exchange for an interest in or share of the property).

However, I fear the size of the gift may raise an eyebrow or 2 - and the lender & solicitor may want more detailed verification regarding its source etc.

Furthermore, if the Donor dies within the proceeding 7 yrs from gifting the moines, and their estate exceeds the nil rate IHT band, the gift will still form part of the Donor's estate, with an IHT liability. (it is formally referred to as a PET (potentially exempt transfer) gift.

So, if the Donor has an estate that currently exceeds or is likely to exceed nil rate bands, you may want to consider making some provision to counteract any poss IHT liability. ( a gift inter vivos policy will be the most suitable protection - your financial adviser should be able to assist).

With regards to your credit rating - without knowing how bad it is (prev bankruptcy and current CCJs will be a issue) - the low LTV will greatly assist the lenders assessment.

Hope this helps

H

Jaikagen

Thank you. My credit rating isnt bad as such i dont think [847 on my credit expert if that is any help? one default of £244 in 2005] but im really worried about it as my partners is spotless.

My IL's would have no issues proving where the money came from, and because of this gift, my partner is not set to inherit any part of their house as things stand [there house is worth a lot more than the value of the one we are potentially buying, however, after discussions, we have decided this is the better option, having the money now, rather than waiting what could be 40+ years] that would be left to our children instead. So the only thing he would be set to inherit would be any money left in their will, which we understand that this money would be added to should he die within the 7 year period.

holly_hobby

Defaults (whether satisfied or not) fall off your credit record a few weeks after their 6th anniversary of registration. You say your default was registered in 2005 - so its due to "expire" this yr (you'll know what month it was registered).

Even so, and if you don't want to wait until this happens, I don't think it will have a huge impact as it is just about 6 yrs old, wasn't for a huge amount and you have a really low LTV - also a good reason for the default will help if the lender requests details.

I would seek the assistance of a whole of market broker, who will be able to source the most suitable lender & best product. (inc 1 acceptable to your default if you don't want to wait until it expires)

Hope this helps

Holly