Bank of Mum and Dad to the rescue??

Oxid8uk

Thrugelmir wrote: »

Did you and your partner sign the "letter"?

Was it independently witnessed on signature?

No we did not sign it and he didn't have it independently witnessed either, so I can see that maybe it could look like being forged or something (I assume that is what you might be getting at?). However, he spoke directly with our mortgage advisor at HSBC about it, who noted the details of the call on their systems. And being an account holder at HSBC himself for over 40 years he gave his details in the letter should they wish to make any integrity checks, check signatures etc.

We were always very clear throughout the application that it was a loan, not a gift.

Thrugelmir

Oxid8uk wrote: »

No we did not sign it and he didn't have it independently witnessed either, so I can see that maybe it could look like being forged or something (I assume that is what you might be getting at?).

Not forged. In essence it doesn't constitute a legal agreement. So would carry very little weight in certain circumstances.

geoffky

Some of the wisest mortgage advisor's on these boards have spoken...Listen to what they are telling you..

Oxid8uk

Thrugelmir wrote: »

Not forged. In essence it doesn't constitute a legal agreement. So would carry very little weight in certain circumstances.

In what sense would it not consistute a legal agreement? Between me and HSBC, between my dad and HSBC or between me and my dad?

Surely if HSBC were not happy with the 'legality' of the loan/letter/arrangement the underwriters would never have progressed our application to full mortgage offer? Or at least would have conditioned the mortgage offer to fully protect their interests?

Oxid8uk

geoffky wrote: »

Some of the wisest mortgage advisor's on these boards have spoken...Listen to what they are telling you..

Is this aimed at me or the OP?

If me, yes I have listened to what the mortgage advisors have said on this thread and totally understand where they are coming from. However, I was just giving the OP my experience of this situation. I thought that was the whole point of these forums - to share knowledge and experience?

My experience has been that, despite always stating the money from my dad was a loan and not a gift, my lender still gave me the mortgage without taking into account any 'repayments' to my dad in their affordability checks. My lender was happy with the arrangement between myself and my dad. And it seems to me that the OP has had the same response from Natwest.

Dave_Ham

The issue being that both yourself and OP have taken the information provided to you by a sales advisor in branch/telephone.

To be fair, we may have been a tad hard as you are sharing your experience and this is what the forum is all about.

The issue is that this may lead others down this route and you have been incredibly lucky, seriously.

Hopefully we would never find out, although it would be interesting how HSBC would play it if they ever had to formally try and reposses you and whether they would then acknowledge this letter or if it would not be on their system??

If you are paying a loan and it is not included in your affordability, I cannot imagine the FSA would be very impressed.

Oxid8uk

Dave_Ham wrote: »

Hopefully we would never find out, although it would be interesting how HSBC would play it if they ever had to formally try and reposses you and whether they would then acknowledge this letter or if it would not be on their system??

We never will find out. The loan is nearly paid back and I can pretty much guarantee that we would never default on the mortgage so repossession is unlikely. Maybe I am just lucky in that my parents would sell the clothes off their back to ensure that situation would never happen.

I suggest the OP gets it in writing from Natwest Head office that they are happy with such an arrangement. Maybe we should have got such an acknowledgement from HSBC but hey ho, what's done is done.

holly_hobby

Myself and the other mge professionals on here have given our professional experience, gained over 1000s of mge applications, over many yrs, between us - that is to say mge lenders are not comfortable with "gifted" deposits whose source is a loan (where repayment is reqd by the Donor, either wholly (at a juncture in the future) or via regular payments).

The reason for this, apart from affordability (if by regular repayment) is the possessionary issues that may arise with the Donor, if the lender seeks a possession order which is challenged by the Donor. So whilst I appreciate that you say Mum & Dad would move heaven and earth in your case, and we all say "oh wouldn't happen to us", no one can predict our own financial/personal future, indeed I'm sure people who are going through repo orders now, said the very same thing when they initially bought their property - but life sometimes throws a curveball that changes everything and thats what the lender wants to try and protect themselves against with regards to such loans).

Now if your parents, or indeed the OPs, would be happy to lose their "loan/gift" as part of the possesson - and a signed disclaimer was stated to this effect, then the lender may be more akin to accept a "loan" from a family member as the source of deposit (but to be honest they don't even bother asking for this, just rejecting at source, so I do wonder whether such an agreement would be legally watertight anyways, seeing that lenders haven't apparently thought of accepting or requesting such a disclaimer).

Anyways back to the plot, if the donation isn't a gift - the lender will perceive future problems, in that the parents (or whomever provided the deposit/loan), may seek to prevent the possession order, off the back of their deposit effectually providing them with an interest in the property. This is the crux of the issues with donated deposits that are NOT a non-conditional gift - if there is ANY consideration at all - then it is not a gifted deposit by any stretch of the imagination or fudging about with descriptions - and we're back to sqaure one.

Oxid8uk wrote: »

I suggest the OP gets it in writing from Natwest Head office that they are happy with such an arrangement.

Indeed, and exactly what we said to the OP some time back ...

Hope this helps explains why there are issues re loaned deposits

Holly x

Victorthe2nd

Again thanks to everyone who's followed and contributed here. Obviously a lot of interest! In my mind:
1) I've now had 4 conversations with different people at NatWest (including one where the advisor went away to ask for a second opinion). These discussions are not with branch staff but with NatWest Mortgage Advisors all of who have, I must say, been exceptionally helpful and patient.
2) In every single case, the reply has been the same. If we are providing some of the deposit, then as long as we don't formally register our interest then NatWest are happy.
3) NatWest also - on each and every occasion - have confirmed that any private arrangement between us and our son is entirely our affair. They even suggested that any money to be paid to us should be declared on his affordability statement.
That seems pretty straightforward to me. We accept the risk that a private agreement carries and that we may lose our money. We also accept that, if he chooses to live with his partner and that relationship breaks up, then we get into a whole new area of discussion.

I take on board the constant points about terminology ("effectively a loan", please don't pick on it again, Holly, I've got the message) and legalities, but 3 mortgage advisors at NatWest saying the same thing can't all be wrong.

If my son chooses to pay me a set amount each month because he's a kind person,that's up to him and me. I can say no more now. I've got - on more than one occasion - comfort that what I'm doing is acceptable to NatWest, and am comfortable with the risk I am accepting in having a private arrangement with my son.

GMS

You need to get something in writing from Natwest really. Also make sure you inform the conveyancer of the nature of the deposit, ideally discussing before application to get their take on it.

Verbal answers from Natwest staff give a degree of comfort but if the solicitor dealing with the conveyancing is not happy with it and/or it is a CML requirement to report then you MAY encounter isuues at the back end.

Much easier for you and all involved to get it nailed down at the beginning. Getting an offer is trhe first part of the process but if completion cannot take place then the offer is literally not worth the paper it is written on.

Nobody is doubting what you have said, or been told. None of the opinions expressed are directed at you personally. Whilst you think it is a non complicated easy application other people are tying to highlight potential problems.