First time buyer deposit declined.

Kellie.

Hi all,

Could anyone give any advice please. we recently recieved an offer on our house from a first time buyer which we accepted and all seemed to be going fine until santander decided to decline their application due to the source of his deposit. Their reason being because he is doing a single application and his deposit is coming from his partners parents of which she is not on the mortgage. Halifax then said this would be ok but on application also got declined. They are now in the middle of an appeal and wondered if anyone has had the same problem and if they could give me any information on what the chances are of the appeal being successful.
Thanks.

amartin1908

Since when did it matter where the deposit money came from?? Sounds a bit odd to me but I am not versed in this subject

Kellie.

I thought the same. I asumed if you had a deposit it wouldnt matter where it came from but I have been told that it is because he is not "a blood relative".

toddler9

I am myslef a first time buyer, and we have been looking at our mortgage options.
Our deposit is going to be very kindly gifted to us from our parents. In our initial meeting with Santander's in-branch mortgage advisor we told her the deposit would be gifted and at what point should this be transferred to our account by our parents?
She then said- "right so your deposit is coming from savings yes?" - "Please don't tell me that it is coming from somebody else as the application is likely to be declined".
The reason being is that in the eyes of the bank if the moey isn't yours someone else essentially has a vested interest in the property and it makes the bank a bit wary- they want ALL their money back in the event of misfortune and no one else laying claim to the equity.
Hope that makes sense!

Kellie.

toddler9 Hope that makes sense!

Yes that does make sense and I can see now why they have come to the conclusion they have. Maybe he should have just said it was his savings, but would they then ask for proof of this?
Thank you very much for your help.

herbiesjp

toddler - if you have said the deposit is from savings when it isn't, then that is fraud.

Kellie - all lenders will want to know where the deposit has come from, and they will require the solicitor to confirm also. They will want to see proof of the deposit in a lot of cases - and if it suddenly appears in your account, without a trail to where it has come from, that will send alarm bells ringing in terms of not matching what you have stated.

GMS

Deposit from parent(s) is fine. Deposit from a close relative is fine.

Deposit from a relative of somebody not party to the mortgage is where the issues arise. I assume the OP's buyer had done a single application due to poor credit or similar.

The deposit was not coming from a close relative of the mortgage holder in that case therefore is outside of lending criteria.

toddler9 - the 'adviser' in question needs reporting. Asking you to submit a fraudulent mortgage application is a disgrace. Deposit would be checked by the solicitors during the conveyancing process so could cause offer to be withdrawn. Be honest about the deposit then there can be no issues. If the deposit is from parents and the child(ren) are party to the mortgage then Santander would have no issue. A letter from the donor(s) would be needed confirming it is a gift and that they would have no interest in the property. Santander even allow a donor to keep an interest as long as it is to be repaid only upon sale (if I remember rightly)

Kellie.

Thanks for all your posts. It is so much clearer now. I will try and recommend as suggested by GMS that they write the letter confirming that it would be a gift and hopefully this will resolve issues.

Thanks again.

Senior_Paper_Monitor

The OP problem is because the 'gift' is from the partner's parents and the partner is not on the mortgage - if it comes to a repossession/forced sale there is a danger of another interested party 'diving in to the fray' as well as the partner (who will have signed a waiver of claim form) and simply the lender can live without this additional risk - common sense, this is their gift to accommodate and look after the interests of their child (the partner) not the person actually taking out the mortgage.

As to the santander in branch mortgage flogger - if accurate, this is both disgraceful (and far too common demonstrating the knowledge and ethics of a worryingly high percentage of such staff) and incorrect, Santander have no basic problem with gifted deposits from parents of those on the moprtgage.

Thrugelmir

Why isn't "she" party to the mortgage?

This would appear to be the real cause of the mortgage application being declined.

Thrugelmir

Kellie. wrote: »

Thanks for all your posts. It is so much clearer now. I will try and recommend as suggested by GMS that they write the letter confirming that it would be a gift and hopefully this will resolve issues.

Thanks again.

I doubt that you've been told the entire truth. So unlikely that you will be able to impact on their mortgage application.