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How do I declare a family loan on mortgage application?
Mikeeee_2
Posts: 76 Forumite
Hello All!
We have recently found a new build property that we love in our perfect area and think it's a great opportunity for us as first time buyers. We like the idea of the Help to Buy equity loan and have had an offer accepted on the property.
We currently have the 5% deposit (saved ourselves over the last year or so) and are applying for the 20% HTB equity loan.
However, we noticed that if we were to accept a loan from my wife's Brother to take our total deposit to 30% then the 70% LTV as the mortgage repayments would be comfortable for us. This way we can repay Brother within the first couple of years.
We obviously need to declare the extra 5% as this is a sizable chunk of money (£16,000) but what is the best way to do it? Can it be written down as a gift or should we declare it as a loan?
Please help!
We have recently found a new build property that we love in our perfect area and think it's a great opportunity for us as first time buyers. We like the idea of the Help to Buy equity loan and have had an offer accepted on the property.
We currently have the 5% deposit (saved ourselves over the last year or so) and are applying for the 20% HTB equity loan.
However, we noticed that if we were to accept a loan from my wife's Brother to take our total deposit to 30% then the 70% LTV as the mortgage repayments would be comfortable for us. This way we can repay Brother within the first couple of years.
We obviously need to declare the extra 5% as this is a sizable chunk of money (£16,000) but what is the best way to do it? Can it be written down as a gift or should we declare it as a loan?
Please help!
0
Comments
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I'm not an expert but I don'tt hink that any mortgage company will allow a loan to make up part of your deposit.0
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Eviesmummy wrote: »I'm not an expert but I don'tt hink that any mortgage company will allow a loan to make up part of your deposit.
Incorrect and doesnt answer the question.
You would declare it as a loan as you are paying it back. A lender will need to know the balance and monthly payments like any loan.
MOST lenders will not accept this so speak to your broker before doing it.I am a Mortgage Adviser
You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Can it be written down as a gift or should we declare it as a loan?
Please help!
It isn't a gift so declaring as such would be fraud.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
A bit lost here. Are you saying the 70% mortgage payment is comfortable but the 75% is not.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
It also sounds like you want to use the loan in combination with the HTB loan and your own deposit to get to 70% LTV. This will not work as the HTB equity loan will simply top up the deposit you have to the 25% mark, meaning if you put 10% deposit in, the equity loan will only be for 15% of the property value, instead of 20%, AFAIK.
Only way round this would probably be to overpay the mortgage as soon as you complete with the extra 5%, but you would then still be at the 75% LTV rate for the initial fixed term of the mortgage product.0 -
The smart move would be not to borrow from your brother in law and buy something less expensive.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
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