gifted deposit concerns

melysion

Well, I shall keep you updated as to the end result. But I am told that Santander is definately aware and that they asked for the details of my friend before they went ahead and made the offer - so we will see.

linearkieran

In a similar situation to you melysion, what was your outcome then?

kingstreet

This is the section of AfI criteria on deposits;-

Proof of deposit

We may request proof of deposit, for example if a First Time
Buyer was putting down a large deposit. We always require
evidence of the deposit where it is £100,000 or more and
is not coming from the simultaneous sale of a borrower’s
existing property.

We can accept deposits provided by gift or loan.

We will not accept a gifted deposit if:

provided by the vendor (unless an acceptable new build incentive from the builder/developer);
protected by a Deed of Trust (or similar);
the person providing it will be living in the property, but is not named on the mortgage;
or there is a beneficial/equitable ownership/interest in the property.

The use of a second charge could indicate the amount provided
is not a gift and further clarification may be required. We do not
allow a second charge on any flexible mortgage products.
Where the source of deposit is a loan, you should provide the
following details in the notes section on Introducer Internet:

amount;
lender (explain background if not a financial institution);
loan terms (e.g. interest rate, payments required);
any security required e.g. second charge; and confirmation that payments have been factored into affordability.

kazzab89

Hi Melysion

What was the outcome?

Did your mortgage go through and complte successfully?

Thanks

melysion

Yes it did. Completed in October

phildamb

melysion wrote: »

I'm a FTB . My deposit is a gifted one. Its from a friend, not a relative. Its a genuine gift. I mentioned this to the IFA I initially spoke to when considering my options and he didnt bring it up as a potential problem. I also mentioned it to my eventual mortgage broker (L&C) and gave him the name and address of my friend so that the lender could contact him at a later date. Again, it wasnt mentioned that it could be a potential problem

Having done some investigation, I'm now worried that, because this is a friend and not a relative, the mortage lender will refuse me the mortgage.

The mortgage application was a slightly painful experience as the mortgage broker made a few mistakes with the application so I'm not convinced that the fact its a gifted deposit from a friend has been recorded. Who knows?

Anyway - I have the mortgage in advance and things are moving along - albeit really slowly - but I'd rather know now that this is doomed to failure than a month or so down the line. The lender hasnt asked anything about the deposit yet but I'm sure it will come up at some point.

Thanks in advance for your advice.

My mortgage was under an identical situation. If they have concerns they will give you something to get them to sign stating they have no financial investment in the property and that it is a gifted deposit and not a loan. The same situation occurs with new builds who give you a part of the deposit. Its not a new thing to banks and L&C are usually quite right on these, when I applied for mine they didn't ask at any point where the deposit came from and it was only later they did ask and they just pointed out that if the property was ever repossessed the lender of the deposit would get nothing as they wouldn't be legally entitled to anything.

Thrugelmir

phildamb wrote: »

they just pointed out that if the property was ever repossessed the lender of the deposit would get nothing as they wouldn't be legally entitled to anything.

The creditors of the donor can overturn the house purchase and recover the money from the sale procceds. If the donor was in financial difficulty prior to making the gift. Then their claim takes precedence over the mortgage lender. The mortgage lender takes the loss if one is crystallised. Hence the issue with gifts from unrelated parties.