Nationwide Proof of Funds

darley.wood

Hi, bit of a ticky one and im not quite sure what the best route to take is here so any advice is gratefully recieved!

We are currently in the process of buying a new build property which is due for completion in March 2014.

We are going through an application with Nationwide and they have come back on where our deposit has come from.

We need a 56k deposit, of which the money is/has come from inheritence money.

We already hold 37k of the money as the first part of the inheritence has come through and so to prove we have the deposit in order to exchange, our parents have 'leant us' the rest of the amount for now until the final installment of the inheritence comes in (which is going to be 30k+).

Now, it wont be hard to get the letter showing the first 37k has come from the inheritence, but how can we prove the inheritence money thats yet to come in?

As our parents have leant us the extra for now, Nationwide want to see their accounts and get them to prove everything under a 'gift' scheme and get them to declare etc etc, but thats not stictly what's happening, we will repay them once the money comes through - but we have no exact date on when itll be (it should have already come through in all honesty, its all ready, just need the final all clear from HMRC to check inheritence taxes etc before distribution).

We are on a strict 28 day exchange target and have already been nearly two weeks into it. Not sure what to do!

Dave_the_Ginger_Cat

If you declare it as a Loan, then Nationwide are not likely to accept it as a source of deposit.

Though you may be able to prove the inheritance is coming your way, this does not guarantee to the Nationwide that you'll pay these funds to your mortgage.


I can see two ways around this:
1) For your parents to accept the risk, and declare it as a gift. That way there would be no repayments payable from you to them under law, you would need to cover off inheritance law. You probably need a lawyer to help you ensure all is well. You could choose to pay the inheritance to your folks if you want to after the event, and again consult a lawyer/IHT adviser for this

2) Apply for an increased mortgage with the 'extra part' on SVR. Then repay it when the inheritance comes through

kingstreet

From Nationwide criteria;-

Source of Deposit

Deposit monies must come from the applicants' own resources, or a family gift, it cannot be borrowed.

Exceptions to this include a protected family gift (family trust deed) where the funds are repayable on the future sale of the property (no other conditions can apply to this deposit)

holly_hobby

The issue for parents and lender, is that you have no legal requirement to repay them the monies from your inheritance, nor is there any defined timeframe here for reciept of your inheritance, and the lender will be mindful of this.

The monies essentially loaned by parents to fund the deposit, gives them equittible ownership rights - which is the issue at hand for the lender, as it can prevent them from successfully securing a possesion order in the event of your default.

So, either you wait until for your inheritance to be recd OR parents and you tell a porky (ie commit mortgage fraud if they do want it repaid) , and say its a true gift (ie made without reservation or requirement of repayment ), to which parents will also have to sign a legal disclaimer forfeiting any beneficial rights from their gift or return of funds from sale of the property.

If you have a broker, has he floated this past his lender rep (BDM) to see what can be mediated, given the circs ? (grasping at straws and I'm not hopeful, but at least you've bottomed it out for your own piece of mind).

Hope this helps

Holly x

ChopperST

All sound advice.

Your parents will have to gift you the money end of. You cannot borrow money to fund a deposit.

Simon_gloster

Lack of reply from the OP suggests they are up some sort of creek. Dear o dear homework is critical.

Wallhart

Can't you do help to buy and then use the second part of inheritance to pay the government back???

Simon_gloster

They need to be liquid funds with no clawback for the initial deposit. Inheritance is a grey and undesirablearea in mortgage lending unless probate is complete and funds in an account.

28 day exchange, hmmmm sweat that one out!!!

darley.wood

Thank you for the (mostly) helpful advice!

We did not ever want to say it was 'loaned' money - as it wasnt necessarily true and understand how it looks to the lender.

Also did not want to tell any 'porkys' at any stage.

Lack of response from myself did not mean we were up **** creek, more than I have been working in London without access to private websites/emails for the past 36 hours! Of which I have been spending enough of my private time on the phone to our IFA.

The inheritence money should have already come through by now, probate is all cleared months ago, the funds are set and they are just waiting the clearance from HMRC to prove all taxes have been paid correctly before they can offically issue the money out. This has been taking over 2 months now to do so its a bit frustrating.

Our IFA has spoken to the solicitors of the deceasead estate and have been able to get them to confirm in writing what has already been issued through inheritence (as we've had one lot of it already) and then confirm that an amount will be due imminently as the funds are ready btu awaiting final clearance. They have done this and the IFA has sent it to the lender.

Awaiting to hear back if they need any more proof or wont accept it. If they dont, we'll have to go through the gift option although this isnt preferable.

We dont need that part of the desposit until March, the amount we need to hand over at exchange (5%) is already available.

holly_hobby

darley.wood wrote: »

We did not ever want to say it was 'loaned' money - as it wasnt necessarily true and understand how it looks to the lender.

Also did not want to tell any 'porkys' at any stage.

Awaiting to hear back if they need any more proof or wont accept it. If they dont, we'll have to go through the gift option although this isnt preferable.

However, the issue for the lender will be changing the underlying basis of the donation to fit their criteria ie - to say its a non-conditional gift WOULD fundamentally be untrue, IF your parents DO indeed want it repaid at some point (which you say they do), it is essentially termed as a loan. (no matter how temporary or to be repaid from a forthcoming inheritance you're awaiting).

darley.wood wrote: »

Our IFA has spoken to the solicitors of the deceasead estate and have been able to get them to confirm in writing what has already been issued through inheritence (as we've had one lot of it already)

Although from an underwriters point of view, this may indeed demonstrate the inheritance discussed is based on fact, it has no actual baring on future funds you wish to utilise or when they'll materalise.

darley.wood wrote: »

and then confirm that an amount will be due imminently as the funds are ready btu awaiting final clearance. They have done this and the IFA has sent it to the lender.

Again, from an underwriters point of view, this means that the sum quoted is essentially not gtedas confirmed, or payable to you in the immediate future, as it remains subject to a pending HMRC review and possible final adjustment (reduction)- which the lender will have to be mindful of - a pain I know !

However, your IFA has taken the intrim steps I would have suggested and undertaken, and needs (once in receipt of supporting evidence from the decd's solicitor) to then liaise with his BDM (lender rep) about this - as going via the BDM will give him a better chance than any, of getting this pushed through with the UWs ... and to this he can do no more. But from expereince, I would be hesitant that the lender will accept this, but never say never.

Now if the lender suggests stating its a gift (but mum and dad will have to sign a gift disclaimer forfeiting all rights), then thats better than nothing at this stage, and as its at their suggestion, then you're in the clear.

Anyhoo, do wish you well, don't forget to let us know how you got on with this - fingers crossed for speedy solution.

Hope this helps

Holly x

ValHaller

Another option to deal with this is for you to assign the inheritance money to parents as a gift and for them to give you the money. That way, the lender can see the paperwork showing the money is given, but parents are not out on a limb.