Mortgage - Deposit Assistance

mnorton2k

My family have kindly agreed to help myself and my partner out by lending us the deposit so that we can buy the house we are currently renting, which is great as it will give us the 10% needed in order to purchase the property. The caveat is that my parents (as it's part of their retirement fune) obviously want to make sure that they get back the desposit in the future (approx 5 years) and would prefer to do this legally.

However after speaking with a mortgage advisor he has suggested that the money would have to be "gifted" in order that the mortgage companies will accept this, they are unlikely to accept if there are any other charges on the property unless we have 25% or more equity in the property ? is there any other way around this putting in place some legal agreement that means we are responsible for paying back what we have borrowed from them and at the same time keeping the mortgage company happy ?

Any thoughts or suggestions gratefully recieved.

Dave_Ham

There is no way you can 100% formalise this.

Once the mortgage is completed, you could have a deed of trust although it could not be registered to the property as you would not have suitable equity and the lender would be likely to oppose this, especially given the recent nature of the "gift"

There used to be some lenders where you could declare as a loan and put the loan amount into affordability, although much less widespread now and to be honest you would be better getting a loan and showing on credit file.

Issue then is lender would see you have not managed to save the deposit up.

Could put a parent on the mortgage application with you and put their share as higher with the solicitor, although depends on many other variables...

mnorton2k

Is there not even a way of saying that the mortgage company will get the first payout on the mortgage, then it's down to my parents then it's myself ? or would that still require the approval of the mortgage company ?

Gary123456790

What you are describing is charges registered with the land registry. The mortgage company would have to agree to this.

Dave has it right when he says "There is no way you can 100% formalise this.".

Gary.