advice needed please!

JLS1234

If we borrow £5k off a grandparent towards our deposit and they want it paying back, what difference does this make to the solicitor?

obviously we have to show her our bank statements and how we accrued the money for the deposit (stupid anti money laundering law) and there is this big £5k deposited in there with no other explanation other than we borrowed it, but what will the solicitor do with this information? does it matter?

thanks!

hamster2013

letter from grandparents that they are loaning it to you is sufficient.
this will also raise eyebrows with lender though as it will affect your affordability

zzzLazyDaisy

Your solicitor acts for your lender, so is obliged to report the loan. At best the £5k will be deducted from the amount they are willing to lend you, at worst they will refuse to lend.

If you are struggling to raise the deposit, have you considered the govt's help to buy scheme?
https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-equity-loans

JLS1234

Thanks I thought this may be the case!! I did not declare it to the lender however.
We are taking out £16k less than the maximum they were prepared to lend us and our affordability/budget run through showed us with over £1k a month left as disposable income after bills etc, do you think this would make them refuse to lend to us?

BitterAndTwisted

No, I don't think it will.

zzzLazyDaisy

You didn't declare it to the lender, but it will show up on the money laundering checks and the solicitor will be obliged to declare it.

Will the lender refuse to lend? Who knows? We don't know who your lender is. Some will not lend where any part of the deposit is loaned because the point of the deposit is that is the amount the lender wants you to put down. Put it this way, say you can't raise the deposit so you ask the lender to reduce the amount of deposit you have to pay by £5k. What is the answer? Borrowing part of the deposit from another source is the same sort of thing.

Hopefully kingstreet will be along shortly, he will be able to give you an idea of how your lender is likely to view this, if you tell him who the lender is.

kingstreet

A gift from a relative is fine.

A loan will elicit all kinds of questions, such as how it will be repaid, if interest is payable, if the donor will take an interest in the property.

This should have been disclosed at the outset.

JLS1234

Thank you for your responses!

lb364

Just ask the grandparent if they're happy to write a letter stating it is a gift and does not require repaying. You can still repay them at a later date as planned but it will keep the mortgage lender happy.

[Deleted User]

lb364 wrote: »

Just ask the grandparent if they're happy to write a letter stating it is a gift and does not require repaying. You can still repay them at a later date as planned but it will keep the mortgage lender happy.

This is a terrible idea, it's fraud. Don't do this.

mr.pj

Is it fraud if the relative gifts you £5000 and then i dunno you decide to give the £5000 as a Christmas present in a couple of years time?