Please help - Parents helping with deposit

richwalo

Hi. My parents have very kindly offered to help myself and my girlfriend considerably with the deposit on a house in London that we love. We will be paying this back on a monthly basis (interest free)

In order to protect their money they wanted to be on the deeds of the house. They did the same with my brother about 4 years ago and it wasn't a problem. It did mean that they needed to be on the mortgage as well (as I guarantor I think).

I have been told by numerous lenders it isn't possible to do this really anymore (as it's post c crunch). As my parents are in their early 60s the maximum term I could get a mortgage for is 14years. This isn't realistic for us as the monthly mortgage payments would be astronomical!

The only alternative, I am told, is to 'gift' the deposit to myself and my girlfriend and adjust the tenants in common % accordingly (weighted more to me). My parents are completely against this as they want some interest in the property in case anything went wrong (we split up, bankruptcy).

Although my parents have said that they don't require any repayment until after the mortgage period all the lenders seem to classify this as a loan.

Is there anything that anyone can suggest? I am desperate. We have handed our notice in on our flat and if we don't get this house I don't think we'll be buying in London for a very long time (as we need parents help)

Thanks

opinions4u

Would a Lloyds TSB Lend A Hand mortgage be preferable to them?

The lender puts a charge on a savings account in your parents' names for 42 months. After that, they get their money back.

phil_b_2

I bought a house with my girlfriend just over 2 years ago. Her parent chipped in £50k towards the deposit (very nice!). We recently split up and are going our separate ways now. Her parents had fully considered this situation though of course. At the start, They went to their solicitor and drew up a formal contract sating that we must begin paying their £50k back after the initial 2 year mortgage fixed term.

In the contract were details about if we split etc. The various scenarios were stated. i.e we sell the house, they get their £50k and we split whatever is left OR one of us buys the other out providing we can also repay their 50k in full as part of the deal.

So ultimately my GF has bought me out and since they are her parents they are leaving the 50k in the property, otherwise I'd have had to stump up and extra 50k to give to them...
Another condition was that in the event of us not being able to come to an agreement, that after a period of 3 months on the market the house would be put to auction. They made sure they were well covered which is fair enough.

Cant see any other way of doing it. The contract wasnt presented to the mortgage company. It was signed and agreed once our mortgage was in place in fact.

poppy10_2

phil_b wrote: »

The contract wasnt presented to the mortgage company.

That's pretty much fraud. Might have been looked over in the bad old days, but nowadays banks are more careful about making you declare the source of your deposit. Many people who have gifted deposits from parents are finding that the banks are demanding the parents sign a contract stating the money is a gift and is not expected to be paid back.

taliesin

We did this for one of our sons a year or so back. We used the Britannia Family Equity scheme. We loaned our son 25% of the purchase price, Britannia came up with 75%; they have a first charge on the property, we have a second charge. The first person we spoke to there wasn't aware of the scheme, so do press on with your enquiry until you find someone. Let's see what there is on the web ... here we go:

http://www.britannia.co.uk/_site/elements/Body/callouts/mortgage/common-guides/family-equity-scheme.html

For what it's worth, when we were looking for this, I spoke to a specialist broker who said they had a number of lenders who were willing to take an arrangement of this sort on.

Note: comments addressed to OP, not to #3.

Dave_Ham

Ultimately get some good advice, Aldermore also do a family guarantee mortgage...

Good luck

Thrugelmir

phil_b wrote: »

Cant see any other way of doing it. The contract wasnt presented to the mortgage company. It was signed and agreed once our mortgage was in place in fact.

Potentially it would not have been legally binding if the matter went to court.

star4876

I took out a joint mortgage in September/October last year and the banks and solicitors were very particular about checking deposit details. Even a gift of £2,000 from parents had to be declared in writing, otherwise we were told it would count as a loan and the lender wouldn't like it.
The way I understand it nowadays is, its either a gift, or a loan. If its a loan then your lender needs to know about it, and it may adversely affect your application. The only way around it is to come to an informal 'off the record' agreement with the parents on repayments, but this gives them no security. They would have to declare it was a gift.