Advice needed - Gift Letter

Angelicdevil

Hi,

I'm in the final stages of purchasing my first property, my mortgage offer is with my solicitors. They (solicitors) have requested a letter from my giftee (my mother) confirming who she is and where the money is coming from.

Whilst the money is a gift, my father intends on raising a second charge on the property to ensure that the money is ringfenced should I meet someone, move them in and then they decide they have a right to a percentage of my property, so that they won't ever have a claim on it. This has all been brought about due to changes/potential changes to cohabitation rights.

My query is all about whether I need to state the second charge interest in the letter regarding where the deposit is coming from or should I keep schtum till I have exchanged contracts?

I'm worried that this will put an end to my house purchase as I believe mortgage companies do not like second charges on properties.......

kingstreet

Angelicdevil wrote: »

whether I need to state the second charge interest in the letter regarding where the deposit is coming from or should I keep schtum till I have exchanged contracts?

If you don't disclose it, you'll be employing deception to get your mortgage. If you do, I'd expect the lender to consider withdrawing your mortgage offer.

I'm glad I'm not you. Can't suggest anything helpful, I'm afraid. Shame your father mentioned this before completion.

Thrugelmir

Suggest you speak to a solicitor. As far easier ways of protecting your interest (equity) in the property when the time arises. Than what's proposed.

From the mortgage lenders perspective its not a gift if there's a second charge on the property. Your lender would have to approve of the charge in any event.

LMCD

why dont you do a prenuptial agreement if a relationship ever go so serious?!

Wh05apk

This depends on the lender and timing, if your father intends placing a charge from day one, most will be cautious, but if he gave you the deposit, then decided to place a charge later, there is not a lot they can do about it.

I would suggest you speak to you broker/lender to clarify what is required.

Angelicdevil

Wh05apk - My lender is Santander and my mortgage advisor did ask if they had a problem with second charges and they said they didn't, but I don't believe this was disclosed at the time of application......

My father is quite intent on getting this legally drawn up ASAP even though I tell him to hold off till I've completed but he doesn't want the letter to my solicitors about the gift to not mention the second charge.....panicking now!

Thrugelmir

Angelicdevil wrote: »

My father is quite intent on getting this legally drawn up ASAP even though I tell him to hold off till I've completed but he doesn't want the letter to my solicitors about the gift to not mention the second charge.....panicking now!

To protect your interest all in essence you will require is a Deed of Trust drawn up at the appropriate time.

To register a second charge the approval of the first charge holder will be required. This is a standard condition from mortgage lenders.

Angelicdevil

OK, bit confused now, spoke to my advisor who said it will be OK to state the second charge in the letter to my solicitors as it's within their lending criteria. I did some searching and found the below link that states on page 9 that:

5 If the donor wishes to protect their gifted deposit by taking a second charge,
we will accept this if the gift is only repayable on the sale of the property


(abbeyforintermediaries.com/library/lib_44.pdf Can't post links so removed the www. )

This is their example letter:

‘A gifted deposit of £x,xxx from (name of person and
relationship to customer). (Name of person) will not have
any interest in the property nor protect the gift by taking a
second charge’.


A little contradictory? I assume I need to find a way to word the second sentence that explains the second charge will only come into force on sale of the property....