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Quick Query regarding deposits.
u4n90
Posts: 34 Forumite
I am fortunate enough to be buying my first house from my own father, with my father-in-law providing the deposit for the mortgage.
My query is this; my father is selling the £100,000 house and only wants £75,000 for it.
My father-in-law is willing to lend me up to £30,000 to secure the property, but would like the money back once i've used it to secure the mortgage.
The bank will be unaware I am buying the house for much less than it is worth and i will consequently be asking for the full amount from them. (£70,000 loan)
Is there a scenario in which i can pay him back immediately, pay my father the £75,000 he wants and maybe have a little renovation money left?
I was contemplating borrowing 5% off my father-in-law instead and getting a loan of £95,000. That way we would have the money to pay my dad £75,000 and repay £5000 to my father-in-law, leaving £20,000 for renovations.
In essence; i am buying the house for £30,000 less than it is worth. I want the full amount i can get from the bank, in order to pay back whatever my father-in-law lends to me (which needn't be the full £30,000 he's offering), plus have a little left over.
OK admittedly that's not a quick query, but any thoughts would be welcome.
My query is this; my father is selling the £100,000 house and only wants £75,000 for it.
My father-in-law is willing to lend me up to £30,000 to secure the property, but would like the money back once i've used it to secure the mortgage.
The bank will be unaware I am buying the house for much less than it is worth and i will consequently be asking for the full amount from them. (£70,000 loan)
Is there a scenario in which i can pay him back immediately, pay my father the £75,000 he wants and maybe have a little renovation money left?
I was contemplating borrowing 5% off my father-in-law instead and getting a loan of £95,000. That way we would have the money to pay my dad £75,000 and repay £5000 to my father-in-law, leaving £20,000 for renovations.
In essence; i am buying the house for £30,000 less than it is worth. I want the full amount i can get from the bank, in order to pay back whatever my father-in-law lends to me (which needn't be the full £30,000 he's offering), plus have a little left over.
OK admittedly that's not a quick query, but any thoughts would be welcome.
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Comments
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You can't do this. The days where you can have a 'little left over' with a mortgage are long gone.
They will be aware of what you are buying it for. YOu can't lie to them.
And you will have to declare that the 'deposit' is a loan.
Basically, a complete non starter0 -
arbrighton wrote: »You can't do this. The days where you can have a 'little left over' with a mortgage are long gone.
They will be aware of what you are buying it for. YOu can't lie to them.
And you will have to declare that the 'deposit' is a loan.
Basically, a complete non starter
Even if my father asks for the full amount of £100,000? The bank won't know he intends to pay me back £25,000 on completion.0 -
That's not correct arbrighton.
OP, I don't see where the £30k comes into it. How would that help you to secure a mortgage?
Get your father to sell you the house with £25k as a gifted deposit. You get a mortgage for £75k. Job done. These amounts could be changed so that, say, you get a gifted deposit of £20k with a mortgage of £80k (subject to what mortgage amount you can get, of course). If your father then happened, completely independently, to give you £5k after the sale as a present, I don't see that it would be anyone's business.0 -
That sounds like fraud...0
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fairy_lights wrote: »That sounds like fraud...
i'm not sure on this point? isn't he perfectly entitled to undersell a house to anyone he likes?
and as stated above, we aren't going to declare the intention of having him pay me back, (or more accurately have him pay for the renovation work)0 -
That's not correct arbrighton.
OP, I don't see where the £30k comes into it. How would that help you to secure a mortgage?
Get your father to sell you the house with £25k as a gifted deposit. You get a mortgage for £75k. Job done. These amounts could be changed so that, say, you get a gifted deposit of £20k with a mortgage of £80k (subject to what mortgage amount you can get, of course). If your father then happened, completely independently, to give you £5k after the sale as a present, I don't see that it would be anyone's business.
many thanks for this, it has steered me in the right direction i think. Nationwide offer a gifted deposit mortgage and this sounds like exactly what i was going for.0 -
i'm not sure on this point? isn't he perfectly entitled to undersell a house to anyone he likes?
and as stated above, we aren't going to declare the intention of having him pay me back, (or more accurately have him pay for the renovation work)
Sounds very much like fraud to me too.
He's selling an assert to a family member for less than its worth.
Imagine how many people would be doing this with elderly relatives to get around inheritance tax...0 -
More to the point OP, selling assets under market value could be an issue if your father ever needs to go into a care home. Google 'deprivation of assets'. It won't necessarily be an issue but you need to be aware of it.0
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Sounds very much like fraud to me too.
He's selling an assert to a family member for less than its worth.
Imagine how many people would be doing this with elderly relatives to get around inheritance tax...
Given that the OP's father would lose use of the house in selling it, it's no different to selling the house to a stranger.0 -
I'm no expert but wouldn't the Stamp duty be investigated as a result of the property being sold for lower than the valuation comes back? HMRC have up to 9 months after completion to investigate SDLT and I'd be surprised if they don't come knocking for tax evasion in this case.0
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