Sole mortgage due to partners bad credit - lots of advice needed...help???

Lara882

Hi, my partner and I have just had an offer accepted on a property and are looking into mortgages. We have a mortgage in principle agreed for £210,000 with Halifax, this is based on a sole applicant (my partner) and his income of £42,000 pa.

I have bad credit and am currently on a DMP with about 5 years left till I'm debt free, therefore I cannot be involved in the mortgage application. However, I am providing the £21,000 deposit and we are confused as to how we can go about the process of applying for the mortgage with me providing the deposit and my partner being sole applicant on the mortgage. I would also be contributing to all household bills and the mortgage, I would be contributing approx 35% towards household bills and mortgage with my partner covering the remaining 65% (due to the difference between our incomes, I earn £27,000). I understand some people will advise us to use the deposit to clear my debt but this is not an option for us. This money will be used for the deposit as it was gifted to me by a family member to be used a deposit.

Can anyone advise us on the best way to go about this? I have read some info on 'gifted deposits' but if I do this does it mean I have no way of securing the money I am paying into the house. Should we split up in the future we agree we would sell the house and I would receive the £21,000 back as this money was given to me by family. Any equity left after the £21,000 would then be split 65%/35%. Ideally we would get a legal contract drawn up by a solicitor outlining this agreement. I realise people may ask why I am going into detail about plans regarding a breakdown in our relationship, obviously we are not going into this thinking about breaking up, however I do feel it is important to consider these things before making such a financial commitment and as we are not married it is complicated set up.

Can anyone help us out with any advise re applying for a sole applicant mortgage, having a partner with bad credit and/or gifted deposits etc. If I gift a deposit how much of my details would the mortgage lender want? Would it then link me to the house? If the mortgage lender insist on a letter explaining the deposit is gifted from me would this make any legal contract we have drawn up about me getting the £21,000 back 'null and void' ? Does my partner have to state I (and my son) will be living in the property and if yes will this go against him in his application for the mortgage?

Sorry for all the questions, any advice will be gratefully received x

Thrugelmir

You cannot pick and choose your involvement. Either all in or out.

Where's the deposit coming from? As this should be used to clear your DMP.

With the incoming regulation. Lenders are going to be extremely hot on any form of deception (application fraud). So you must think before you leap. As the register maintained by NationalHunters is somewhere you don't want to appear on.

ACG

If you were to gift it to your partner you would have to sign a letter to say its a gift you have no right in the property or expect the money back.

Contemptuous

ACG wrote: »

If you were to gift it to your partner you would have to sign a letter to say its a gift you have no right in the property or expect the money back.

Although bear in mind some lenders only accept gifts between family members and not spouses.

GMS

Lenders do not like the deposit being provided by somebody who is not party to the mortgage but will reside in the property.

Ensure you are clear on this or it may fall apart during conveyancing leaving you out of pocket and potentially on a naughty list

Lara882

The deposit has been given to me by a grandparent to enable us to buy a house, I did mention that in the thread above as I knew this would be questioned. My family are not aware that I got into debt and I do not wish to discuss this with them. If I informed my grandparent that the money were going to be used to clear debt it would not be given to me in the first place.

If I were to clear the DMP it will still take years for my credit to go back up so using the money to pay my DMP will just mean that we do not have sufficient money for a deposit and I will still be unable to go on a mortgage application for years to come. However, if we use the money for a deposit we can buy a house and I will continue to pay the DMP at the rate I am and in a few years it will be clear of debt and hopefully then over time my credit will get back to something resembling normal. Its complicated but I hope that makes sense?

Lara882

Hi GMS, can I ask you to expand? please excuse my ignorance, I really do know nothing about this process and its really stressful for us. When you say 'be clear on this' what exactly do you mean, be clear that I will be living in the property? Also do you know how much of my details they will request? Thanks

Thrugelmir

Lara882 wrote: »

The deposit has been given to me by a grandparent to enable us to buy a house, I did mention that in the thread above as I knew this would be questioned. My family are not aware that I got into debt and I do not wish to discuss this with them. If I informed my grandparent that the money were going to be used to clear debt it would not be given to me in the first place.

If I were to clear the DMP it will still take years for my credit to go back up so using the money to pay my DMP will just mean that we do not have sufficient money for a deposit and I will still be unable to go on a mortgage application for years to come. However, if we use the money for a deposit we can buy a house and I will continue to pay the DMP at the rate I am and in a few years it will be clear of debt and hopefully then over time my credit will get back to something resembling normal. Its complicated but I hope that makes sense?

A current DMP and mortgage are totally incompatible.

Given that you know that a deposit is available. Should be a spur to you both to address the issue of your debts. May be a few years away but something worth striving for.

Lara882

I understand a DMP and mortgage are incompatible which is why my partner is the sole applicant for the mortgage.
If we were to rent we would be paying as much in rent as we would in mortgage. We are lucky enough to be gifted a deposit to allow us to buy, therefore to me we would be better buying and at least paying off a mortgage and my DMP as opposed to paying rent (i.e throwing money away) and my DMP.

amnblog

GMS is saying, quite correctly, that Halifax will ask for proof of the deposit - deposit coming from individuals who are not related to the applicant are a no.

Do your grandparents know that you are looking to put their cash into property purchase on which you will not be party?

This is not going to work.

Get yourself some sensible advice from a broker.

Black_Eyeliner

Could you give the £21k to your partner's parents, who could then gift it to your partner? I know it's not 100% honest but then again neither are the banks!