loan / gift deposit

basil123_2

Hi,

First post.. I hope someone can help..

Myself & my girlfriend are in the process of buying a flat. The deposit (approximately 11%), is a 'loan' from my g/f's parents. By 'loan' I mean the parents are giving us the deposit with the understanding that when / if we sell the flat they will get the money back plus 11% of any profit made on the property.

On the mortgage application we have declared that the deposit is a gift, and are planning to get a seperate agreement drawn up by our solicitor saying that we owe the value of the deposit plus any profit to the parents. Is this legal / possible?

Thanks for any help!!

basil123_2

shameless bump

helping_hubby

I was hoping you might get an answer for this. I think you'd need to speak to your solicitors to find out.

In my mind I'd say it's not right, as you'd be lying to the Mortgage company. Although, it's different because you'd only ever repay your parents after the sale of the house. Its not like you're repaying them monthly like a loan and therefore affecting your outgoings.

Can you not tell the mortgage company that it's not a gift? But there are no repayments for the loan until the house sells?

Gem_

You can put a second charge on the property during the buying process - without lying to the mortgage company.

My husbands mortgage company (Halifax) were fine with this as although the property deposit was not his, it was a second charge and therefore the mortgage company knew they would get their money first.

PM me if you want to see a copy of the wording we used.

HTH

Gem

basil123_2

An update on this one:

Firstly, thanks for the replies on this.

In the end our conveyencing solicitor drew up a document called a 'deed of trust' which outlined the terms of the 'gift' which was then signed by me, my girlfriend and her parents The flat purchase all went very smoothly and the lender (Nationwide) had no issues with this.

All's well that ends well!

(I won't spoil the happy ending by mentioning the farce I am having with BT's customer service team!!!!!) :-)