Deposit help from parents?

Rummy_2

Hello again,

I've just had a few thoughts about a house I'm currently looking to buy.

The house is £175,000(accepted), and I plan to have a deposit of £130,000 - with the help of my parents.

About £79,000 of it will be coming from my own name*, and the rest my parents will be putting in. I intend to pay them back over time, but it's a gift. If you get my drift. What sort of implications am I looking at with this, if they sign a declaration saying that it IS a gift?

*£27,000 of this is currently in my fixedrate/bond ISAs, rather than lose the interest my mum was going to lend me £27,000(as she has it not earning much) in addition until next march when they mature and then I pay that back immediately on maturity/she may get some of the interest too.



Essentially, is any/all of this going to be a huge problem for anyone involved(me, parents, bank, conveyancers)? Should I just break the ISAs now rather than take that £27,000 from my mum in addition to the rest? Also my dad has already given me £18,500 of the sum from his name already.


(things such as a partner, marriage etc are currently non-applicable - if and when that becomes an issue I'd be looking at protecting my own assets in the event of anything going wrong anyway)

Yorkie1

If any of the deposit is a loan then you need to declare it - or you risk the mortgage application / supporting documentation being fraudulent.

If your solicitor asks to see proof of deposit, what would you produce?

Goldiegirl

I think lenders will want want any parental help to be in the form of a non returnable gift ....... So if you intend to pay your parents back, the money doesn't fall into this category.

Often the lenders want written confirmation from the donor that the funds are a true non returnable gift. So if your parents signed a form to say it would be a gift, this wouldn't be true.

The reality is that the lender would probably never find out if your paid the money back some years later, but the relationship between the lender and the borrower should be based on trust, so I wouldn't personally be happy to sign something that was false.

I think you'd be better off funding the whole purchase yourself .... Or persuading your parents to give you the money as a true gift!

Rummy_2

Nevermind this bit. Thanks all for the replies.

If your solicitor asks to see proof of deposit, what would you produce?

I'm going to show where all the money is coming from.

Fire_Fox

If you intend to pay it back it is not a gift in the eyes of any legal entity it is a loan, albeit perhaps a long term one. On paper means you intend to break the law/ commit mortgage fraud/ lie to a solicitor, that is against forum rules.

Rummy_2

I see. I will talk to my parents about it some more then and break the investments now. Thank you all for the replies.

Sponge

We're buying a house, using some money from my parents and some from my wife's. The money is a gift, i.e. we're not repaying them. We declared this to our lender during our mortgage application.

The solicitor handling our sale/purchase has sent them all letters (I haven't actually seen the letters, but our solicitor went through the process with us) for them to officially declare the money is a true gift and that they won't have any interest in the new property, or require repayment.

They have already given us the money. It was a simple matter to print off a bank statement and show this to our solicitor as 'proof of funds'.

seven-day-weekend

We gave our son the deposit for his flat. IIRC, all we had to do was tell the solicitor that it was a gift.