1st time buyer - quick question

Hughesy84

Quick question.

Me & my partner have recently cleared all our debt (£21k in the last 6 weeks or so) – we now have £23k for a deposit…..however the £20k is a gift – does it make a difference if this is in my account or not?

Do lenders look at it better if it’s in my account than just receiving it as a deposit? Anyone know?

Also her credit rating isnt great.....Could I put my salary down and her's as a 2nd income for me??? Any help is appreciated - Thanks :cool:

GMS

Who has gifted the deposit? You will need a letter confirming it is a gift and not repayable.

You cannot use somebody elses salary as a second income for yourself. What is the problem with the credit rating of your partner?

Hughesy84

My mum - so does it make a difference who's account its in?

She has some problems with some old store cards (probably 4-5 yearsa go) and I think either 1 or 2 of them gave her defaults.

I earn £28.5k (rising to £29k in April) - She is around £17k......the property we want will cost £170k

ChopperST

Hughesy84 wrote: »

My mum - so does it make a difference who's account its in?

She has some problems with some old store cards (probably 4-5 yearsa go) and I think either 1 or 2 of them gave her defaults.

I earn £28.5k (rising to £29k in April) - She is around £17k......the property we want will cost £170k

The gifted deposit isnt a problem providining your mum is happy to write to the lender to confirm this is a gift and non-repayable.

The defaults however are a different story. I'd strongly recommend you get both of your credit reports to clarify what is on there exactly before you start applying. I'd then get a whole of the market broker to go through your application with you (being honest) about the defaults.

The other thing to bear in mind is if you apply for a mortgage with your OH and she has adverse credit you will be financially linked with her, i.e. her adverse credit could impact your ability to obtain credit as lenders could search her as well as you.

Speak to a broker before you do anything else and get those credit reports...

Hughesy84

Rather than getting her to sign a letter saying its a gift, wouldnt it be easier to just get her to move the money to my account for a few months now??

Credit reports will be on order later this week also....thats on the to do list!

Hughesy84

Anyone know??

Also we have cleared £21k of debt in last 6 weeks or so....will our credit record improve each month now there is no debt (i.e. would a credit search be better in a few months) or will it make no difference now we have no credit??

maurice28

Hughesy84 wrote: »

Rather than getting her to sign a letter saying its a gift, wouldnt it be easier to just get her to move the money to my account for a few months now??

Credit reports will be on order later this week also....thats on the to do list!

I know when myself and my girlfriend were first time buyers this time last year, our lenders (Britannia) needed to see a trail of where our deposit funds had come from, due to anti-money laundering laws.

If you ask your mum to put the £20k into your account now, even a few months in advance, the bank are likely to want to know where that £20k came from. You'll then have to say it was from your mum. They will then ask if it is a gift or a loan...

Is there a problem with your mum writing a letter to say the money is a gift?

Hughesy84

No problem at all mate - I was simply asking if it helps my credit ratings to be in my account or not?

Also am I right in thinking savings dont really get accounted for on credit report/ searches anyway??

GMS

Hughesy84 wrote: »

Rather than getting her to sign a letter saying its a gift, wouldnt it be easier to just get her to move the money to my account for a few months now??

Credit reports will be on order later this week also....thats on the to do list!

This has been debated before on this site. The lender will want to know the SOURCE of the funds. If this was a gift then you will require the necessary declarations from the donor to state the same. It has been argued that as soon as the cash is in your account iy is yours and therefore savings.

The issue is that it was not savings, it was a gift. When the solicitor goes through the completion process they are required to check that the funds for deposit are acceptable to the lender. If the solicitor is not satisfied they will report back to the lender who could then withdraw the offer if they wish.

Seems a pretty straight forward case of Mum has given the money, therefore no issue. Why try to make it into something it isn't and potentially cause yourself issues?

maurice28

Hughesy84 wrote: »

No problem at all mate - I was simply asking if it helps my credit ratings to be in my account or not?

Also am I right in thinking savings dont really get accounted for on credit report/ searches anyway??

A savings account will not show up on your credit report as it does not involve credit. I'm sure someone will correct me if I'm wrong but when your mum gives you the money will have no impact on your credit rating either way.

Hughesy84

GMS wrote: »

Seems a pretty straight forward case of Mum has given the money, therefore no issue. Why try to make it into something it isn't and potentially cause yourself issues?

Oh I dont have a prob with a letter sayings its a gift, thats no issue......it was more my question about how it will affect my credit ratings if anything??

We have cleared all our debts in the last 6 weeks (about £21k) - would it be good to apply for our mortgage now or wait a few months to show we have accrued no more debts and have infact saved cash??? Or as per Maurice does the credit rating not get affected by this sort of stuff??

Thanks:j