Deposit a gift?

frazzled22

Hi all,

My boyfriend and I are in the process of buying a house and the solicitors documents recently arrived. We are a bit unsure how to fill them in as I am paying the deposit, but my name is not going to be on the mortgage.

We mentioned I was paying the deposit when setting up the mortgage and nothing was said. I am unsure whether this is considered to be a gift because I will be living in the house and contributing.

Could our mortgage now be refused if the deposit is a gift?

holly_hobby

This will cause a major issue with the lender - as its not a gift, and you intend to live in the property off the back off it. (this is to do with possessionary ownership), if you are using a broker he should be fully aware of the issues and have advised you accordingly.

Hope this helps

Holly

Simon_gloster

Many threads on this recently. Lenders are not keen at all on this arrangement and the solicitor is duty bound to inform them of the origin of funds.

Why are you not on the mortgage?

The main reason for them not liking thisbis the messy aftermath should they want to repossess and you drag your heals demanding you have some form of say in the property as you placed the deposit.

Expect a hard time. Use a broker and expect to pay a fee.

kingstreet

frazzled22 wrote: »

Hi all,

My boyfriend and I are in the process of buying a house and the solicitors documents recently arrived. We are a bit unsure how to fill them in as I am paying the deposit, but my name is not going to be on the mortgage.

We mentioned I was paying the deposit when setting up the mortgage and nothing was said. I am unsure whether this is considered to be a gift because I will be living in the house and contributing.

Could our mortgage now be refused if the deposit is a gift?

Abbey/Santander criteria on this issue, for example;-

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 future of this application is going to depend on which lender you're using.

Gentoo365

It is a gift if you are not expected to get anything in return.

In fact, you are expecting to live in the property, therefore it is not really a gift.

The mortgage company would prefer you to be on the mortgage, firstly so that they can chase you for payment/arrears and secondly so that you sign a document stating that the house can be repossessed.

If you cannot be on the mortgage for whatever reason then you need to find a broker who knows a mortgage company willing to lend in this situation.

You may hear that 'lots of people do this and are fine' however not all people are honest, some will obfuscate the source of the funds and put themselves at the risk of a 'fraud' flag or worse.

The sensible advice is to explain the situation to the solicitor, and the mortgage company and ask them what your options are.

To me it seems that you being on the mortgage is the easiest. However I don't know your situation and if that would be appropriate.

frazzled22

Thanks for all the advice.

I am a trainee teacher so even though I get a substantial bursary this is not considered income for a mortgage, having my name on it reduces the amount we can borrow by too much.
The house is shared ownership so our mortgage choices are limited, we are using nationwide as we had a great deal for being existing customers.
I have looked on their website and they don't have much information so I think I will just go to my local branch and get their opinion.

Tracewhy

Frazzled, use a broker, there are some good ones on here. Its a risky option and what you don't want is to get so far down the track, have all the credit searches done and then be refused the mortgage as this then makes it more difficult when going to a different lender.

After all the issues I had, I'd now definately recommend a broker in anything thats not a straight forward case (which this isn't). Good luck and if you want a broker pm me and I'll send you the details of the one I used. Good luck