Loaned deposit from family

Cheddargorge

I was wondering if anyone could help me! What is the general stance on a loaned deposit from a family member? The terms would be 0% interest loan and no particular monthly terms attached, just the promise to pay the deposit back over time. Would mortgage lenders treat this in the same way as a commercial loan? Also, would mortgage lenders allow such an agreement? I know that it is fairly straight forward when the deposit is gifted but this may not be an option for us. I am just looking for a little advice on such an agreement to see if it is worth pursuing. If not then it's back to saving for a few more years! Many thanks for your help.

Black_Eyeliner

I think the money has to be gifted. But I can't see why you can't make a private arrangement to pay your family back without telling your lender.

curls

We have recently given some money to our son to help with his deposit. The mortgage lender (Nationwide) required us to write a letter saying that it was a non-conditional gift and didn't require repaying.

brit1234

Black_Eyeliner wrote: »

I think the money has to be gifted. But I can't see why you can't make a private arrangement to pay your family back without telling your lender.

Because it is fraud a criminal offence.

Black_Eyeliner

I think calling it 'fraud' is a bit strong. People can give money to whoever they choose.

GMS

Black_Eyeliner wrote: »

I think calling it 'fraud' is a bit strong. People can give money to whoever they choose.

But this isn't giving, it's loaning.

Lying about the source of deposit is the fraudulent part.

Incidentally for a mortgage any gift would need to be from family so whilst people can give money to whoever they choose it doesn't always fit for a mortgage.

Black_Eyeliner

What I mean is if family gift the deposit, then the OP chooses to repay the family member over a period of time, then it's difficult to see how that could be considered mortgage fraud. My guess would be that this sort of arrangement is fairly commonplace. As long as the mortgage is being repaid then what's the problem?

GMS

Black_Eyeliner wrote: »

What I mean is if family gift the deposit, then the OP chooses to repay the family member over a period of time, then it's difficult to see how that could be considered mortgage fraud. My guess would be that this sort of arrangement is fairly commonplace. As long as the mortgage is being repaid then what's the problem?

To 'gift' the money would mean no repayment required.

A letter would need to be signed to this effect. If the gift is actually a loan and declared as a gift it is false information submitted as part of the application therefore fraud.

Whether it is commonplace or not it doesn't make it right.

Black_Eyeliner

Well if I was the OP I'd just keep my mouth shut about it being a loan, assuming the family member is happy to declare the money as a gift. Where's the harm?

BillJones

Black_Eyeliner wrote: »

I think the money has to be gifted. But I can't see why you can't make a private arrangement to pay your family back without telling your lender.

Well, one good reason to not would be that they'd be committing mortgage fraud

BillJones

Black_Eyeliner wrote: »

Well if I was the OP I'd just keep my mouth shut about it being a loan, assuming the family member is happy to declare the money as a gift. Where's the harm?

Are you doing this on your mortgage application with the "gifted" deposit, or do you only encourage others to commit fraud?