Help - Advice on Gifted Deposit from Partners Parents

polka1

Hi,

I am buying a flat with a 10% deposit however the majority of this deposit is a gift from my partner's parent's. Problem is my partner has a bad credit rating so is not on the mortgage. For the purpose of the mortgage I am the sole Buyer. If I put "Partners Parents" on the Gift of Deposit letter will this get through? Does it have to be a family member of mine?

Would appreciate advice!

BitterAndTwisted

Mortgage lenders don't care where the gifted deposit comes from, just that it is truly gifted, and they will ask your partner's parents for a legal declaration to confirm that.

I have to say that as you will be buying in your sole name your partner's parents are either eccentric millionaires, truly trusting or bloody fools!

polka1

Thanku for the quick reply, not quite sure which of the three options suits them best!! Partner and i are signing a deed of trust so their gift would be under his share of the house should things go wrong.

I haven't specified anywhere on the mortgage application that my partner is living in the house so hoping I don't get more questions?! I've read it had to be a family member giving the gift is this not a requirement any more?

zzzLazyDaisy

polka1 wrote: »

Thanku for the quick reply, not quite sure which of the three options suits them best!! Partner and i are signing a deed of trust so their gift would be under his share of the house should things go wrong.

I haven't specified anywhere on the mortgage application that my partner is living in the house so hoping I don't get more questions?! I've read it had to be a family member giving the gift is this not a requirement any more?

I suspect is going to be more complicated than you think. If by 'his share of the house' you mean that you are intending for the house to be jointly owned between you and your partner, then your partner must also be on the mortgage.

kingstreet

I was talking to Nationwide about such a case yesterday and the conversation went like this:-

Me - "sole purchase, as one partner has adverse, but part of deposit in that partner's account. What do you think?"

Them - "we don't accept deposit coming from someone not party to the mortgage, especially if this is an "adverse credit" avoidance tactic."

Me - "who can gift part of the deposit, is it only a family member of the applicant?"

Them - "yes, only gifts from relatives of the applicant will be accepted."

Establish upfront what your lender will accept. This may not come to light until later in the process and if you are declined then, you may have spent hundreds in fees to get there, only to waste that money on a lender which would never have accepted your proposition.

grifferz

Is it also the case that some lenders will look unfavourably on an application where almost the entirety of the deposit is gifted? Their reasoning being that the applicant(s) show no ability to save money for themselves.

(I ask merely out of interest)

kingstreet

That may be an ancillary issue. If the rest of the case looks good, it's not usually a problem.

However, if you have a low-scoring case which looks tight on affordability it may be a factor in the lender deciding the case is too risky.

Let's say it's 5x income, 95% with four addresses in the last three years, a month in current job and the odd late payment in the credit history. A wholly gifted deposit could then be the camel's back-breaking straw.

polka1

Thanks for the info Kingstreet, I haven't gone into all the details of where the deposit is coming from with my mortgage advisor as it actually hadn''t crossed my mind it would be a problem until now lender wants proof of deposit. Original plan was to have partner on the mortgage until we realised I could get a better deal on my own due to his credit rating.

It's around 5x salary, 90% mortgage, just under 2 yrs in current job and 2 addresses in last 3 yrs.

Half of deposit is coming from partners parents, around a third from my parents and rest from my savings, in your experience does this have a chance of getting approved with nationwide?! Application in already :-(

kingstreet

I suggest you call Nationwide and discuss the deposit issue with them as it appears to be the obvious issue which could give you problems further down the line. You may wish to discuss with the solicitor you plan to instruct to act for you/them too.

Usually, the lender does not request proof of deposit, it leaves that to the solicitor, so it does not get done until well into the process.

The rest of the case looks okay, although you may wish to use the Nationwide affordability calculator to establish the amount you need is within reach, taking into account any other outgoings/commitments.

polka1

Yeah im fine on the nationwide affordability calc, spoke to Mortgage advisor today and they don't think it will go through, apparently they are one of the strictest lenders at looking into where the deposit comes from. Will find out more tomorrow but expecting to have to start again on a mortgage application elsewhere, grrrr!

wannahouse

polka1 wrote: »

Yeah im fine on the nationwide affordability calc, spoke to Mortgage advisor today and they don't think it will go through, apparently they are one of the strictest lenders at looking into where the deposit comes from. Will find out more tomorrow but expecting to have to start again on a mortgage application elsewhere, grrrr!

lloyds tsb didn't seem to care where ours came from, as my husband is getting the mortgage in his sole name, we have a 10% deposit, and my parents and his parents are making up the other 5% deposit.
We applied directly through lloyds tsb as we couldn't go through a broker with them.
My husband has been offered a 5x multiple loan with an excellent credit score.