Gifted part of a house/mortgage the other

Bexm

Hi

I am looking for advice as my mortgage adviser has confused me!

My parents want me and my husband to have their current house when they move out. They have agreed to gift us two thirds of it if we can take out a mortgage on the final third. (around £100,000).

Our mortgage adviser says this is a special case and only specific lenders will allow this.

He says they are giving us a gifted deposit where as actually what I was thinking would happen would be I just already own the 2/3rds and want to take a mortgage on the other 3rd?

What I want to know is why does it make a difference?

Previously I've never had to pay a mortgage adviser but this one is asking for £299 for his services if we complete a purchase.
Is he just trying to get out money by being cagey or am I just getting really confused???

betmunch

I'm afraid what you think you are doing is confusing me, so I suspect you and your mortgage advisor are looking at it from different perspectives.


You do not own 2/3rds and the mortgage company owns 1/3rd.


You own the whole thing and have a mortgage for the equivalent of 1/3rd.


You state that would be £100,000 and therefore the house must be worth £300,000.


Your parents are gifting you £200,000 of the equity which is what makes it a difficult case which will not be acceptable by all lenders.


Therefore you need to either do a normal mortgage with a deposit of gifted equity, or one that would be a considered a concessionary purchase.


Does this help?

somethingcorporate

Sounds like a complex situation where the advisor will earn their fee!

kingstreet

It's a concessionary purchase and most lenders won't do it.

Those that do will allow someone to purchase a property at undervalue from a close relative using the price reduction as their deposit.

Bexm

I am now pretty confused!!!

betmunch wrote: »

Your parents are gifting you £200,000 of the equity which is what makes it a difficult case which will not be acceptable by all lenders.


Therefore you need to either do a normal mortgage with a deposit of gifted equity, or one that would be a considered a concessionary purchase.

The above is what I think I'm doing...
With the gifted equity, not a concessionary purchase.
I can understand a concessionary purchase could be difficult to get a mortgage, but why would a gifted deposit/equity make it any different, when we bought our first house they gifted us the deposit of £6000 but nothing was ever said about this?

The reason I was thinking the other way was, what if, (and I'm not sure this is possible) 2/3rds of the house was signed over to me before all this purchasing takes place so then I would technically just buying out my parents third?
Is this something that would work?

JimmyTheWig

Bexm wrote: »

when we bought our first house they gifted us the deposit of £6000 but nothing was ever said about this?

Presumably this was before the banking crisis. Things are different now.

The reason I was thinking the other way was, what if, (and I'm not sure this is possible) 2/3rds of the house was signed over to me before all this purchasing takes place so then I would technically just buying out my parents third?
Is this something that would work?

I have no idea but presumably it would depend on how long a gap there was between the two transactions for them not to be linked.
You would also need to pay two lots of solicitors costs (as you would be doing two transfers), which is likely to be much higher than the broker's fee.


In a similar vein to the OP's question of being gifted the 2/3 first then buying the remaining 1/3, what happens when someone in this situation comes to remortgage? Do they have to declare the gift forever more?

Bexm

This is all so confusing..! I just want to be able to get a decent mortgage deal.. I don't mind paying the broker if this is now the done thing!
Just the whole process is confusing me.. I think I am changing brokers though because I can only speak to this one on the phone and I'd much rather just sit down with someone and speak to them properly!


This is also a very good point!!

JimmyTheWig wrote: »

In a similar vein to the OP's question of being gifted the 2/3 first then buying the remaining 1/3, what happens when someone in this situation comes to remortgage? Do they have to declare the gift forever more?

Senior_Paper_Monitor

To be fair it appears your current broker is 100% correct in what he/she is telling you - why change ?

getmore4less

Do your parents need the £100k or could they just become your lender.

Just increase the size of the loan to take account of the interest they won't be charging you.


if they need the money then a lender will be needed.

betmunch

You should be fine to get a good mortgage deal.


Lenders will have limits on how much the gift can be so its imperative that the right lender is selected.


You should be fine I reckon

JimmyTheWig

Bexm wrote: »

This is all so confusing..! I just want to be able to get a decent mortgage deal.. I don't mind paying the broker if this is now the done thing!

The done thing now is to save up your own deposit and the mortgage application becomes simple. In which case most people can either use a broker or do it themselves.

The done thing is no longer being given a deposit. Which makes your case complicated. Which makes paying a good broker worthwhile.

Just the whole process is confusing me.. I think I am changing brokers though because I can only speak to this one on the phone and I'd much rather just sit down with someone and speak to them properly!

There is certainly no point in paying a broker who confuses more than he makes clear.
Your current broker has been correct, as SPM says, but that's not much help if you don't understand what he is correct about and you think a different broker could explain it better.