FTB parents help

geordie28

Hi folks

i am a single 31 year old living with the folks and will be a FTB in the near future. I currently have £4500 saved up, i have no debt, have a clean credit file and im putting away £600 per month. I earn £19000 pa. My dad is getting made redundant/retiring and there may be the possibility that he could lend me £20k to help with my deposit. This is not a gift so at some point i would need to pay it back. I am thinking with my salary and this £20k assistance i could possibly be able to buy a flat maybe £90k-£100k. affordability wise i would rather live alone but i am happy to take in a lodger to help cover monthly costs if thats what it takes to get out on my own.

my question relates to this £20k. i take it the bank would want to know where this money comes from. would they want to see a legal agreement on this being paid back or would they accept this as a gift? i havnt really discussed payment options but im hoping £100 per month on this or more when i have a lodger. Also would they deduct this from the amount they would borrow me. for example if i had saved enough myself to cover all other moving costs and could still contribute £5k to the deposit would they still only allow me to borrow 4.5 x 19000 less the £20k = £65500. so the max i could spend would be £90500?

thanks.

btw im at least 6 months away from this so just thinking out loud and making sure i know what im doing so please be gentle

Yorkie1

You will need to declare on the mortgage application what the source(s) of your deposit funds are. If you state either that it all comes from your savings, or from a parental gift, that is mortgage fraud because it isn't the truth as you've stated it here - i.e. the money will have to be repaid.

If you do state that it's a gift, the lender will also require something in writing from your parents - sometimes even an official sworn statement - to confirm that the money is a gift and is not to be repaid. So you would also be involving your parents in fraud.

If you did declare that it was a loan, then yes the lender would take it into account when assessing your affordability.