Gifted Deposit Source Query

Firefly1710

Hi, applying for a mortgage through Santander - large part of deposit/ and or stamp duty/ solicitors fees was expected to be gifted from father in law. My wife will live in the property but not be on the mortgage. Will this be an issue assuming he signs to confirm it's a gift and no interest in the home etc? I know that if it was direct from my wife it would be a problem but it doesn't suggest this scenario on the intermediary guide.

If needs be I have quite sufficient equity in a vehicle I can sell quickly for less than its worth to raise the would be gifted amount but would rather not.

Thanks in advance.

GMS

Yes it will be an issue as you are being gifted a deposit from a non relative.


Why is your wife not going on to the mortgage?

Firefly1710

Thank you, & credit history unfortunately.

Firefly1710

I have a majority of the actual deposit saved already & the rest will be there from my own savings by completion (its a new build). The rest was just needed to cover stamp duty/ sols fees. Could a gift be used for that part without issue if not towards the actual deposit?

jamesd

It's only the gifted deposit that would be a concern, the rest is fine.

Your solicitor, acting on behalf of the mortgage company as well as to protect you, will want proof of the availability of the deposit funds, probably before agreeing to exchange contracts.

If you aren't tight on affordability you can do something like putting your normal spending on a 0% for purchases credit card to cut outgoing money flow for a while, then repay later out of a gift. The credit card amount borrowed will be counted as an expense.

Firefly1710

Affordability is tight on the new rules i think. Used saving to pay off remaining debt...which in hindsight should have been done using the gifted money.

jamesd

Right. Though if it was done quite recently you might accept the gift for that purpose anyway, since that would just be a timing/convenience issue for getting rid of the debt.

amnblog

What has your broker said Firefly?

kingstreet

If you answer yes to any of the following questions,
unfortunately we will decline the application;-

10. Will an occupier who is not an applicant on the new
mortgage application be paying a lump sum towards
the purchase of the property?

http://www.santanderforintermediaries.co.uk/library/lending/Original.pdf

Proof of deposit

We may request proof of deposit, for example if a First Time Buyer was putting down a large deposit. We always require evidence of the deposit where it is £100,000 or more and is not coming from the simultaneous sale of a borrower’s existing property.

We can accept deposits provided by gift or loan.

We will not accept a gifted deposit if:

provided by the vendor (unless an acceptable new build
incentive from the builder/developer);

protected by a Deed of Trust (or similar);

the person providing it will be living in the property, but
is not named on the mortgage; or

there is a beneficial/equitable ownership/interest in
the property.

As the gift is from a non-relative of the applicant, it may be viewed as passing through the hands of the non-applicant resident first.

jamesd

Ever heard of a lender declining on the basis of gifted debt clearing?

No idea whether that's credible in this case, since the debt clearing would have had to be very recent for it to be credible. More a question that could be of value to others in similar situations in the future who could plan things better with more understanding of what lenders do and don't want to see.

Firefly1710 wrote: »

If needs be I have quite sufficient equity in a vehicle I can sell quickly for less than its worth to raise the would be gifted amount but would rather not.

I wonder whether the in-law would have an interest in purchasing the vehicle from you and perhaps selling it back to you at a fair price in a year or two? Perhaps they might let your spouse or you lease the vehicle from them for that year or two? Sale and lease-back deals aren't uncommon in the property area and may be useful in this situation where you could have a need for the capital and where a lease to your spouse would not affect your income for affordability at all, while she could let you use the vehicle as now.

Rather than the in-law buying it from you, perhaps your spouse might want to do so, with their parent providing the money for the purchase?

If you do this do be sure that all proper legal processes to change owner are done. Don't make false claims that it has been sold if it hasn't really been sold. Assume that the mortgage lender will want proof and act accordingly.

firsttimebuyer14

Ahhh!!

I'm nervy now! I have a deposit from my partners parents which has already been transferred to my account, letter from them stating it's a gift. I did inform Halifax and they said this was fine - should I still worry this could be rejected on this factor?