Declined mortgage due to gifted money?

getmore4less

You buy the house your parents get their share so effectively get the money they give you back.

It is not a gift they are transferring part of their share of the house to you and your boyfriend.


Moving money is just trying to hide the true transaction(even if you do not realise it).

gildedlily

getmore4less wrote: »

You buy the house your parents get their share so effectively get the money they give you back.

It is not a gift they are transferring part of their share of the house to you and your boyfriend.


Moving money is just trying to hide the true transaction(even if you do not realise it).

Thanks for your reply, could you elaborate that point for me, please?

Will any gift of money (big or small) from my parents trigger this reaction just because they own part of the house, or is there a threshold value?

Is there any way around this issue?

Mokka

getmore4less just said in 2 sentences what I've tried (and failed) in over 20!

It is my understanding that once you've been declined for a mortgage you cannot re-apply.

Thus no point studying this website:
http://www.santanderforintermediaries.co.uk/content/mortgages/lending-criteria
Unless you want to understand why your application failed.

Here is a quote relating to your situation:
Undervalue transactions
Where the purchase price is within 80% of the value, we can consider applications using LTV based on the purchase price of a property below its market value, subject to the relationship between vendor and purchaser meeting our requirements.
I am guessing you failed their requirements because you are not married (though if the value of you parents' gift was more than 20% you would have failed anyway, once Abbey spotted this)

Cohabiting couples are not always treated in the same way as married, for instance on death of one of the partners without leaving a will, the legal position of the surviving partner is very different. Thus lenders do not want to have 3rd parties having a claim on the property in such eventuality.

My recommendation would be:

Make things as simple as possible regarding your parent's gift/equity transfer

Ask a lawyer for advice

Change a broker

GOod luck!

silvercar

I'm making up numbers, but are you basically saying something like this:

House worth 300k, currently owned 100k your parents, 100k parent's sibling number 1, 100k parent's sibling number 2.

parents gifting you 150k.

you and boyfriend have a joint deposit of say 40k

you want a mortgage of 110k (110+40+150=300).

So when you get the mortgage and make the purchase, some of the parental gift money will be returned to your parents.

Lenders are nervous of transactions involving money ending up where it started. It would be better to phrase the above scenario as

House worth 300k, currently owned 100k your parents, 100k parent's sibling number 1, 100k parent's sibling number 2.

parents gifting you their share of the property and 50k cash.

you and boyfriend have a joint deposit of say 40k

you want a mortgage of 110k (110+40=200).

and calling the parents gift a gifted deposit plus some cash.

gildedlily

Mokka wrote: »

getmore4less just said in 2 sentences what I've tried (and failed) in over 20! a gift I don't possess, either!

It is my understanding that once you've been declined for a mortgage you cannot re-apply.

Thus no point studying this website:

Unless you want to understand why your application failed.Thanks, will check it - I do want answers

Here is a quote relating to your situation:
Undervalue transactions I still can't see how this is an undervalued transaction...am I missing something?
Where the purchase price is within 80% of the value, we can consider applications using LTV based on the purchase price of a property below its market value, subject to the relationship between vendor and purchaser meeting our requirements.
I am guessing you failed their requirements because you are not married (though if the value of you parents' gift was more than 20% you would have failed anyway, once Abbey spotted this)interesting, thanks

Cohabiting couples are not always treated in the same way as married, for instance on death of one of the partners without leaving a will, the legal position of the surviving partner is very different. Thus lenders do not want to have 3rd parties having a claim on the property in such eventuality.even if you draw up an agreement (Tenants in Common, Cohabitation) with a lawyer specifically to address these issues prior to application?
My recommendation would be:

Make things as simple as possible regarding your parent's gift/equity transfer

Ask a lawyer for advice

Change a broker

GOod luck!

Thanks so much - I think I need it!

gildedlily

silvercar wrote: »

I'm making up numbers, but are you basically saying something like this:

House worth 300k, currently owned 100k your parents, 100k parent's sibling number 1, 100k parent's sibling number 2.

parents gifting you 150k.

you and boyfriend have a joint deposit of say 40k

you want a mortgage of 110k (110+40+150=300).

So when you get the mortgage and make the purchase, some of the parental gift money will be returned to your parents.

Lenders are nervous of transactions involving money ending up where it started. It would be better to phrase the above scenario as

House worth 300k, currently owned 100k your parents, 100k parent's sibling number 1, 100k parent's sibling number 2.

parents gifting you their share of the property and 50k cash.

you and boyfriend have a joint deposit of say 40k

you want a mortgage of 110k (110+40=200).

and calling the parents gift a gifted deposit plus some cash.

Ah, thanks! Yes, that is basically the scenario (except the amount my parents are gifting me is less than their 1/3rd share of the house).

I will discuss this idea with my parents - I didn't know that would make such a difference.

Would it be easy for my parents to gift their 1/3rd to me?

silvercar

gildedlily wrote: »

Ah, thanks! Yes, that is basically the scenario (except the amount my parents are gifting me is less than their 1/3rd share of the house).

I will discuss this idea with my parents - I didn't know that would make such a difference.

Would it be easy for my parents to gift their 1/3rd to me?

Much easier.

Make it as simple as possible.

gildedlily

Thanks Silvercar - gives me hope

I wish my broker would have mentioned all of this before we got into the application process

Mokka

I still can't see how this is an undervalued transaction...am I missing something?

If parents own 33% of the property and you are paying for 20% of it with their own money and only 13% with your own and/or borrowed money than it is equivalent of purchasing property with a 20% discount, although going about it in a very complicated way.

If it looks like a discount and barks like a discount then the bank thinks it's a discount;)

Regarding the agreement with your OH re: cohabitation you should have it ready before applying for a mortgage- our lawyer gave us all the paperwork.Being married is just simpler and banks do not like extra complications and extra paperwork.

Anyway, I've given up on thinking of banks as rational. They have their slightly insane rules and exclusions and if you want a mortgage you have to toe the line.

I think lenders are being funny with people wanting mortgages because all the tens of thousands of £ they will earn in interest are simply small change to them.

getmore4less

gildedlily wrote: »

Thanks for your reply, could you elaborate that point for me, please?

Will any gift of money (big or small) from my parents trigger this reaction just because they own part of the house, or is there a threshold value?

Is there any way around this issue?

I think you missed the point there is no money gift it is part of the house that is being gifted!

I gift you £1, you buy a Galaxy off me for £1.

Is no different to me gifting you the Galaxy.

Having a fake money transaction just looks like you are trying something on.


I think others elaborated on this and what you might need to do to solve it(they were long posts not got round to reading them)