First time buyer deposit from parents query

pinkie84

Hi All,
I'm a first-time buyer having received a very generous offer from my parents of a deposit on a property. I've spoken to a mortgage broker, have had an offer accepted on a property and am now in the process of arranging a solicitor.

What i want to do is have something written up that states my parents investment in the property (ie the deposit amount), so that if/when i decide to sell and move on, it is easy for me to repay the money to them. I am sure there must be a legal process for this but am completely clueless as to what it is i should be looking for, can any one advise on this?

Just to clarify - we do trust one another, the reason that i wish for this to be drawn up legally is simply that it is a large sum of money and i want to ensure things are done correctly!

Thank you.
Pinkie84

CLAPTON

the money from your parents is a loan?
in which case the mortgage lender will probably not accept this

pinkie84

It's not a loan in the official sense. But if i chose to sell / move on i would like to repay them. They are not insisting on it. From what you have said, I assume there is nothing i can do officially, just an unofficial agreement between myself and them?

CLAPTON

the mortgage lender will ask the source of your funds; if they are gift from your parents they will probably want a letter from them saying the money is a gift.


if, later, you wish to make a gift to your parents then there is no law against that

I'm not really sure what you mean official; if it's officail then that implies legally binding; is it or is it not legally binding?

when you come to move and you have sufficient money available then obviously there is nothing to stop you giving some away to your parents; however do consider whether or not you will be able to afford that as most people move to a more expensive property and not to downsize

pinkie84

Ok so at the moment my mum would like to give me the money to help me - as a single person - get on the property ladder, she has the money "spare" and wishes to do something with it.

I have no intention of moving for a good number of years after buying and mum is aware of this, however she has said that should i decide in the future to buy with a partner, then it would be good to be able to return her initial investment to her.

Both mum and I are new to the mortgage / buying a house process so i apologise if i sound rather clueless!

Leon_W

It would have to be "unofficial".

If there is a legal written up agreement to repay the money on sale then it is a loan, no two ways about it.

Mortgage lenders do not take loans as a deposit so would not lend in this instance but are happy to accept if the deposit is a "gift" being non returnable.

pinkie84

That makes sense. Thank you for your help all.
I appreciate it.

aberdeensaver

I think you should be able to draw up a legal document, I have recently done this as I put up the deposit for the joint purchase with my partner. It cost me £250 and will ensure my investment is safe in the future.

I would strongly advise you do try and get something written up, as my first property was brought outright with money gifted by my father, 5 years later he tried to sell the house from under my feet. Luckily he had actually transfered the money to my account and I had purchased the property not him so he did not succeeded. I did then get the house mortgaged so I could give him his money back, but we then argued about the new valuation of the property and solicitors fees etc etc.

If you call a family law specialist they should be able to help with this.

Thrugelmir

aberdeensaver wrote: »

I think you should be able to draw up a legal document, I have recently done this as I put up the deposit for the joint purchase with my partner. It cost me £250 and will ensure my investment is safe in the future.

That is a different issue. As its to protect the interest of all the "owners" of the property.

pinkie84

Thank you for the responses. I have relayed your advice back to mum and we've agreed to treat it as a gift as per Clapton's post.

Winnter_summer

Hi, I am a first time buyer. I went to see some estate agent in heburn/ southshields. They told me that they have a first time buyer scheme. 90% mortgage and the 10% deposit pays by a company which is interest free for 6 years.I don't know how it works. Is anybody know more details please reply. What they said is that company transferred that deposit to my parents account and I get the deposit money through them.