Gifted deposit mortgage problem.. Help..!!

chris301up

This is a bit lengthy but here goes. My old terraced family home was in a sorry state so I completely gutted it, removed all plaster, had central heating installed and re-wired it, initially with the intention of moving back into it.

After due deliberation, my Wife and I decided not to move back in so contacted a local Estate agent who valued it with the view to selling to a builder to finish off the renovation work.

In the meantime, my Daughter and Son-in-Law decided they wanted to purchase it with a view to renting it out. This I agreed and told them not to pay any money and invest it in the renovation costs etc..

During July 2013 they visited TSB to obtain a mortgage using the 'gifted letter' process. Although the mortgage could not be arranged at the time, due to the condition of the property, they were informed that there would be no problem and to go ahead with the renovation.

Over the past 12 months, or so, they have worked hard and finally finished the renovation last week. They went back to TSB for completion of the mortgage and, to our dismay and disbelief, were told that this process has been discontinued and they can no longer obtain a mortgage using the 'gifted letter' process.

The money they had for any deposit has now been completely used up during the renovation process and they don't know which way to turn regarding the situation?

Any advice would be greatly appreciated.

stephenni1971

Speak to a good broker. Gift of equity as deposit is possible.

amnblog

If I understand this correctly, you currently own the property and wish to sell it to your daughter and son in law for less than the true value without their putting any cash in?

This being the case, this is not a 'gifted deposit' scenario, it is a 'concessionary purchase' scenario.

Engage an experienced mortgage broker and they should be able to resolve this for you. Be aware that some lenders will require 'some' cash deposit from the buyers.

Senior_Paper_Monitor

Agree with amnblog (twice in 5 minutes !!) - pretty standard family concessionary sale (sold under value to family member - the undervalue component being the deposit). Have done a couple of these in last month or so as it happens - I seem to recall we had about 8 high street or major names willing to accept without a great deal of research.


I can't comment on TSB criteria as haven't researched them.

Leon_W

"In the meantime, my Daughter and Son-in-Law decided they wanted to purchase it with a view to renting it out."




If they intend to let it out then they'll need a BTL mortgage. If they are first time landlords and don't own their own home already there will be issues, also many BTL lenders wont be having anything to do with a concessionary purchase.


Speak to a broker as the situation is fraught with seemingly small problems that could jeopardise an incorrectly placed application.

amnblog

Leon_W wrote: »

"In the meantime, my Daughter and Son-in-Law decided they wanted to purchase it with a view to renting it out."

Missed that Leon,

Another curve ball.

Dealing with clients I always liken to a prism, every time you take another angle there is something in it you have not seen before.

Senior_Paper_Monitor

My day for agreeing with everyone !! I missed the renting it out bit !


Very few (if any) lenders accept gifted deposit on BTLs.


Remortgage as BTL in joint ownership (your share could be as little 1%) may be the solution. Certainly sounds like broker territory.

amnblog

Another example of the client wanting to do what seems sensible and practical with the property, and the system unable to easily cope with it.

Leon_W

Ha ha ! Read the brief guys !


Yes it is very easy to miss a tiny little thing on these forums as I've done it myself, so you are forgiven !


Could be bridging territory this one.

chris301up

Just an addendum

The main reason initially for the lower price was that I had completely gutted the property, I had removed the kitchen, bathroom and all plaster, and all I was left with was a complete bare shell.

Was going to sell to a builder through an Estate agent, at a reduced price, so that the refurbishment could have been completed. It was only then that my Daughter came up with the idea of purchasing it.

I would ideally like to continue with the sale to my Daughter as a BTL, but should the worst happen, then I will just put it on the market and put it down to experience!

The system surely doesn't help one little bit???

amnblog

The system, surprisingly, is designed to help the Lender's make profit, the Regulators keep jobs, the Builders sell property, and the Politicians keep the Press quiet.

I suspect your needs are some way down the list Chris.