Missing money - help with Plan B needed!!!

Miss_Merlot

Hi all,

Wondered if anyone out there could please help me with the situation below...??

We are in the conveyancing phases of buying our first flat - all going to plan, we will likely complete towards the end of July.

This was in part possible due to an inheritance from my grandmother of £10k, which we are still awaiting, which on receipt will bring us up from our current 15% deposit to 20%. Just to clarify at this point, my dad is actually the beneficiary of the will, but as he doesn't need the money will be passing to me as soon as it comes through.

Once the money comes through, we will have the required 20% deposit of £42,500.

By the end of July (not including my grandma's money), we will have saved the following ourselves:

Deposit: £33,000
Residuals (solicitors fees, moving costs etc): £3,500 - set aside in a separate account.

My worry is that my grandma's money seems to have been lost in the ether somewhere down the line - she died in January and the probate process was initiated early February, with the solicitor guesstimating a one month turnaround (which I immediately counted on tripling - in my experience things like these never move that quickly!).

And yet here we are five months on in June and still nothing - we have recently been informed that it is with HMRC to process a rebate, and God only knows how long that will last... Unfortunately my dad is not a - what's the word? - appointed administrator of the will, so we are reliant on second hand information from aunts and uncles here.

Yes, we do have a little time yet before our anticipated completion, but - being the cautious (paranoid?) type, I am starting to come up with contingency plans should it still not have come through by point of sale.

Plan A:

Ask the bank if they will lower us down to a 15% mortgage and we can pay with what we already have. Very reluctant to do that as we have budgeted for a 20% mortgage, and this would increase our monthly repayments.

Plan B:

1. Transfer the "residuals" money into the deposit account, bringing our total deposit to £36,500 and leaving £6,000 outstanding to meet the desired 20%.

2. Borrow an additional £6k from a relative to make up the remainder of the deposit (I know they would have to officially "gift" it, as a deposit cannot be made up of borrowed funds - though now the mortgage is approved I don't suppose anyone will be looking too closely at our account movements now...??)

3. Take out a post office loan of £4,000 to cover the residuals of the move (as that isn't specifically for the deposit and is therefore permitted?).

4. When the inheritance comes through - even if after the sale - we could then simply pay back both relative and loan in one fowl swoop - the debt would in essence be a "bridging" one only until the £10k shows up in our accounts.

We know for a fact the money is coming, and if it does turn up in the next 6 weeks well then problem solved. However would like to run my Plan B by you experts to ensure I am not missing a trick or that there is anything I haven't thought of here...??

Any advice welcome!!!

Thanks!!!

Dave_the_Ginger_Cat

Personally I would take Plan A with a slight modification.

Subject to income verification, I would borrow a higher balance with the plans of paying the inheritance to it as capital shortly afterwards. Make sure your mortgage will accept this - many will accept capital payments of up to 10% per year, and that way you will not get into complicated arrangemetns with other people.

Families can act oddly when there's money invovled as many stories on this board show

Miss_Merlot

Hi Dave - thanks for the reply. I think there is a 5 year restriction on paying additional amounts on the mortgage, and also wouldn't that still mean we had higher monthly payments for the whole mortgage term?

Sorry but not sure I quite get you!

Building_Surveyor

Sorry but why did you go through all of this without the money being readily available?

Plan A I say. Then over pay on your mortgage when you get the 10k. But a word of advice. Never rely on money that has not changed hands especially when committing to such a large purchase.

Miss_Merlot

Because we were told 1 month turnaround, and it will be pretty much 7 by the time we plan to complete...

Again repeat the below - can anyone please clarify?

I think there is a 5 year restriction on paying additional amounts on the mortgage, and also wouldn't that still mean we had higher monthly payments for the whole mortgage term?

Would appreciate no more "I told you sos"

Building_Surveyor

You have mentioned nothing about who the lender is nor what product it is so don't know what kind of accurate answer you are expecting????

People did take the time to try and reply inc myself instead of reading on. When you write a whole essay in one asking several questions it makes it difficult for one person to answer all of the questions. but if that is your attitude to friendly advice I doubt people will bother next time.

Miss_Merlot

Nationwide repayment mortgage - anticipated £42,500 deposit and £160,000 (give or take) to repay. Restriction on any overpayment for first 5 years.

In my "essay" I did try to state all relevant information - apologies if did not provide sufficient details. Like many posters on this forum, I am fairly new to this mortgage game.

Not sure if it can be deemed "friendly" to state the obvious to posters on here for perceived ill-advised prior decisions based on clearly explained previous facts at the time, but of course I do thank you for your advice and time, and any further commentary welcome.

Building_Surveyor

Are you going with a 5year fix? I recently took out a nationwide mortgage, 2year fix, allows overpayments of up to £500 a month. Is your statement quoted from the key facts documents you were given? Or are you just guessing about the 5 year restriction? When you say restriction do you mean allows none whatsoever?

I can only really comment on what my product allows but I would have thought other nationwide products would have a similar limit.

Miss_Merlot

Thanks Building_Surveyor.

It is 5 year fixed rate yes.

The small print says:

An Early Repayment Charge of 5.00% applies for the first 5 years if you overpay by more than your overpayment allowance (and is payable on the amount above your overpayment allowance and not on the full overpayment amount) or if you exit your deal early (payable on your outstanding balance). Please check your latest mortgage offer for details.

My husband reckons that after 5 years on fixed, if we paid off the 10k then we would have lower interest rates (as if we had paid 20% deposit at the start) - is this correct?

Also, if we were to go with Plan B, would we have to declare the relative's money as a "gift" now that the mortgage is approved?

Mattygroves2

So assuming your overpayment allowance is £500 a month (you need to check this) you overpay by £500 a month and don't incur any penalties. So it takes you just under 2 years to drip feed the £10k into the mortgage and in the meantime you'd invest the balance and be earning a bit of interest on it.

At the end of the fix you'd remortgage and the LTV would depend on property values then but your mortgage would be £10k lower so (assuming no property crash) you'd be at 80% or lower and should have the option of better rates.

Dave_the_Ginger_Cat

Miss_Merlot wrote: »

Hi Dave - thanks for the reply. I think there is a 5 year restriction on paying additional amounts on the mortgage, and also wouldn't that still mean we had higher monthly payments for the whole mortgage term?

Sorry but not sure I quite get you!

When you pay off a capital payment, you can either reduce the loan term or the payment. You'll only need to pay extra for the time you've had a higher balance

Another way to get around any capital payment restrictions is to take the mortgage in two parts:

Part 1: The fixed rate part of £160,000
Part 2: A standard variable part for £10,000

That way you can repay to part 2 at any time with no penalty