Gifted deposit questions

Coppice

Hi all,

I have £10K, my girlfriend has £10K, my girlfriend's parents have £22,500 to put towards a deposit.

Are there any issues with my girlfriend and her parents gifting me the money to be a sole applicant?

My girlfriend has suffered from M.E. for the past 13 years and only started working self-employed for the past year or so, with minimal earnings or financial history to contribute to the application.

Secondly, if her parents added the money as an investment (recouping when the house is sold), would this affect the amount of money we could borrow?

Thanks,

Tom

holly_hobby

A gift is an unconditional donation - so the fact that your partners parents want it returned, means its not a gift but a loan. An additional issue is the fact that it would not be coming from a close family member of any of the applicants (if GF does not apply as a jnt mortgagor). Both aspects being a no-no for lenders.

A further dammer is your GF assisting with the deposit, not being party to the mge, yet taking permanent residence on completion (which I also take it will result in her wanting her deposit back if you split and subsequently sell). This aspect of your enquiry also makes this a non-goer with lenders, due to possessionary interest of the GF and her contribution to the deposit (ie her "gift" is not non-conditional/or without reservation, but actually in return for her residence and benefit of the property).

If GF goes on the mge (albeit the affordability based on you) this would deal with her deposit and the gifted deposit from her parents (IF her parents change their requirements, and the "gift" is just that, a non-conditional gift made without reservation or future claim) - of which the lender will ask for formal confirmation of this from Mum and Dad.

Maybe a re-think and chat with all involved on the above points will provide a remedy ....

Hope this helps

Holly x

Coppice

Thanks Holly, your reply was really helpful. Thanks for communicating it so well also.

My partner's parents are happy to gift the money, an advanced inheritance for my partner. After discussing it with them post your reply, they're also happy to make if there any affordability issues with adding my partner to the mortgage, which eases the situation in terms of the deposit and also protecting her.

I have a meeting with Lloyds TSB mortgage advisor tomorrow, will see what they say about the set up and importantly how much I can borrow.

Will my banking history with Lloyds TSB (A1 customer apparently) work in my favour over applying with First Direct (who I have no history with)? Or is that inside knowledge for Lloyds worth very little when it's put in front of an underwriter?

Thanks again, Tom

Simon_gloster

If your adding GF, her income will not be used, therefore it needs to pass affordability checks for a couple just on your income.

Holly has wonderfully explained the deposit thingy......GF goes on then its a lot simpler.

Having a bank account will only help in that they could see your spending habits in underwriting. Its generally meaningless if you hold an account.

Let us know how you get on.

Thrugelmir

Coppice wrote: »

I have a meeting with Lloyds TSB mortgage advisor tomorrow, will see what they say about the set up and importantly how much I can borrow.

A passing thought. May be a way around the situation.

Lloyds operate the Lend a Hand Scheme.

http://www.lloydstsb.com/mortgages/lend_a_hand.asp

holly_hobby

No probs Tom, glad I could help !

Really it all hinges on your income being sufficient to svc the reqd borrowings and budget assessment, with a clean credit history (that would be for all applicants, even if not all applicants income is reqd or being utilised), and Mum & Dads deposit also being an un-conditional gift (which those lovely people have now said it is).

Another important consideration (esp as GFs income is low and due to her condition), is to have ideally a joint term assurance policy (subject to any exclusion re her health issues), or at least a single name policy on yourself ( written under trust for your GF), this will ensure that the mge is repaid on at least your death, protecting her residence. Consideration to income and CI protection would also be advised, if budget permits. I wouldn't necessarily pch this from your bank, you may wish to get some figs from them and then bench mark them via the services of a financial adviser or source provision under your own steam.

So, fingers, toes and eyes crossed for you tomorrow - don't forget to let us know how you get on !

Quick hi to Si too :wave: x

Pop back for any more assistance ...

Hope this helps (good luck !)

Holly x

Simon_gloster

Hi Hols, pleasant day?......good spot on that scheme Thrugelmir.

If your looking to purchase properties around £100-£110k her folks get the benefit of that money sat there earning interest and you get the mortgage at 75% rates. The money in the savings account can be from any Tom, !!!!!! or Harry.so winners all round.

holly_hobby

Lovely day Si ... x

Yes, great post by Thurls. - he always comes up with a little gem !

Hopefully between us all, we'll get them there !

H x

Coppice

Rightyeo, had a meeting with the LLoyds TSB mortgage advisor and enquired about loan amount. These are the figures:

Joint mortgage - £113,200
Myself only - £145,700 (more than 5 times my income!)

We don't really want to pursue the joint route as it's asking for ~£37K from girlfriend's parents.

Having spoke to the mortgage advisor she said it wasn't uncommon for the single applicant due to adverse partner situation, and that the gifted deposit shouldn't be an issue. So completely contrasting feedback on the forum

What is the likelihood of having the gifted deposit accepted if came from my partner (non-applicant)? Zero?

Holly, I have death in service with my job (the dangerous world of internet marketing hehe) which is 4 times my annual salary. Added to that her parents will make up any extra, hopefully that doesn't happen any time soon though. We're also happy to have a legal agreement drafted before going ahead.

holly_hobby

A gifted deposit per se is fine (ie - non-conditional and usually from a close family member)

But in my experience, there will certainly be issues with a deposit coming from non-related indviduals (GFs mum and dad, now she wont' be pty to the app), even if despite GF not going on, they are still now happy to give any contribution to you as a unconditional gift. Further compounded by the fact of someone providing you with a element of depsoit, who in exchange will reside in the property with I guess beneficial ownership from its sale, yet not be pty to the mge. Did you clearly discuss the sources of the deposit (apart from your own savings), inc GFs deposit and her residency ?

If so, and the adviser still believes ok, we'll see how it goes .... and I will be really delighted if it somehow sails through for you ( and I genuinely mean that ! x)

Good luck (great news on the mge AIP for you as a single)

Keep us updated ..
Holly x

Thrugelmir

Coppice wrote: »

and that the gifted deposit shouldn't be an issue. So completely contrasting feedback on the forum

The fountains of knowledge on the board would have factored this into account.

if her parents added the money as an investment (recouping when the house is sold),

As one assumes they'll want a legal document to secure their loan. Which doesn't make it a gift without reservation.