Declined mortgage due to gifted money?

holly_hobby

Right, you are buying the house off mum/dad and siblings, for what it has been valued at for marketing purposes by local estate agents estimate.

You are not buying at under market value, so will require a monetary deposit for the lenders requirements.

To this end, Mum and Dad, even though they are the vendors, are going to also going to gift you a sum of money - sort of getting it in one hand and giving it back in the other.

Even though the deposit they are going to gift you is less than what they'll recieve from the sale, technically its a vendor cashback and also an inter family sale, which is really where I think santander and their surveyor are getting in a knot.

The simplest way to do this is for Mum and Dad to instead of giving you a monetary deposit, to instead gift their share of equity in the property to you, which would result in the same end result (with a lender that accepts concessionary/family pch as I've already discussed) but is cleaner and a simplier arrangement for the lender to understand.


If your broker hasn't looked at or considered this, and can't really explain to you whats going on, and this is really basic stuff even for a newly qualified adviser, I would question their experience and understanding (are they estate agency or bank based ?), and consider moving to an alternative experienced independent broker.

Also, if you are resolute on your BF going on the mge, then your solicitor can write up a trust deed deeming how this equity/gift will be treated in the event of a split. But really, if you can afford the mge on your own, I would do so for several reasons, including making any split cleaner.

Hope this helps

Holly

Mokka

holly_hobby wrote: »

Also, if you are resolute on your BF going on the mge, then your solicitor can write up a trust deed deeming how this equity/gift will be treated in the event of a split. But really, if you can afford the mge on your own, I would do so for several reasons, including making any split cleaner.


Holly

If you can afford the mortgage AND the deposit. Another quote from Santander criteria:

Maximum of two customers per application.

If the application includes a person who is going to be living in the property and they are also providing a lump sum towards the purchase, that person must be included on the application and appear on the mortgage.

If the application includes a person who is 18 and over who is going to be living in the property and is not on the mortgage, it is essential that this person postpones their rights to occupy the property in favour of Abbey by signing a Deed of Consent and Charge, which is on the back of the Mortgage Deed (Standard Security in Scotland).

holly_hobby

Yes even if not pty to the mge his residency has to be declared within the app, and he will have to sign a consent to vacate disclaimer (giving the lender vacant possession rights) - all very standard stuff.

My impression was that he wasn't providing any of the deposit at all, which is why I discussed this aspect - BUT if he is contributing to any monetary deposit, then yes he of course has to be party to the mortgage, this is because his financial interest gives him equittible and possessionary interest and rights - meaning that the lender will have difficulty pursuing any possession order on default.

Hope this helps

Holly

getmore4less

holly_hobby wrote: »

You are not buying at under market value, so will require a monetary deposit for the lenders requirements.

Its an undervalue family purchase in disguise through having a fake cash transaction included.

amnblog

The bottom line here Lily is that Abbey Santander cannot get their heads around what you are actually doing (is it a gifted deposit/is it a concessionary purchase) so that don't like it.

Quite simply, as with any lender if it makes them uncomfortable (even if they cannot put their finger on why) they will decline.

If it were me I would be putting this to a lender with a little more vision and adaptability.