Downpayment help from friend

DjangoBuyer

Hi,
I am planning to buy a house with 10% downpayment. I am short of money, however my friend (based in Switzerland) is willing to lend me(with no interest) some money for at least 2 or 3 year period. This is around 15K pounds.
I already have an Approval in Principle, which is well beyond the mortgage amount I will ask for.

My question is :
1) Will the bank look at this as unfavourable ?
2) Are there any legal implications?
3) What is the best way to explain this to the bank ?

Your suggestions will be really helpful.

Thanks
K

Thrugelmir

The source of the deposit is highly likely to be an issue for the lender.

Before making a full mortgage application, best to discuss this with the lender concerned. Before spending any money.

kingstreet

A loan not a gift, from a donor unrelated to you, who does not live in the UK?

Good luck with that. Lender and solicitor will have problems with that.

DjangoBuyer

kingstreet wrote: »

A loan not a gift, from a donor unrelated to you, who does not live in the UK?

Good luck with that. Lender and solicitor will have problems with that.

Hi,
Thanks for the reply.

1) Will it help if I get it as a gift from him? Can i get a letter from him addressed to the bank? Or is there a gift certificate that he can fill. He is employed and a tax payer. We can show any required tax documents if necessary.

Also, just to state the obvious, I am not trying any thing illegal. All money is legally earned through reputed employers.

Thanks

kingstreet

It will definitely have to be a gift.

You will need to establish your lender and solicitor will be happy with this and their likely requirements before you apply.

holly_hobby

Lenders will generally only accept gifted deposits from immedite family members - as it would be considered a highly unusual arrangement for a friend (or non/distant relative) to want to gift you £x amount to facilitate you purchasing a home, for no consideration, repayment or claim on the monies/property upon any possession order.

I would therefore be amazed if the source of this deposit was accepted, if accurately disclosed.

Furthermore you have admitted it isn't a gift at all, but an interest free loan, so to declare otherwise (even if the source was accepted)would be fraudulent.

There are several issues with this, with the nature and basis of the capital tsf probably giving the Solicitor the whiff of money laundering ....

Hope this helps

Holly