Mortgage advice please - re gifted deposits & other stuff

jennduck

Hi everyone, first time poster (& buyer) here hoping for a bit of advice from those in the know.

We are about to part-buy our first property and apply for our first mortgage, a relatively tiny amount. Our LTV is just 22% as my parents are investing their cash in the property which serves as our rather large deposit (we will be paying them rent for their part, although I'm not sure that's relevant).

We saw a mortgage advisor today who advised us to obtain a gifted deposit declaration from my parents to increase our chances of being granted a mortgage. However, having read a sample document I'm not sure this is right for our situation - the money is not a gift, and I think my parents were expecting it remain in their name as it's an investment.

My questions are:
1. Should we be getting a gifted deposit declaration or is this a different situation entirely?
2. Without one are we likely to be declined for a mortgage? I'm not working right now so will presumably be classed as my partner's dependent, but I think our credit ratings are good FWIW.

Any advice would be appreciated, this is all new to us so we don't have a clue.

Oh and since I'm already posting - is it worth paying for an independent mortgage advisor (through the estate agent) or should we go direct to the lender (we've already decided on a mortgage)? I'm not sure what the benefits are or whether she's worth the extra £350-450!

Many thanks

Malmo

jennduck wrote: »

Hi everyone, first time poster (& buyer) here hoping for a bit of advice from those in the know.

We are about to part-buy our first property and apply for our first mortgage, a relatively tiny amount. Our LTV is just 22% as my parents are investing their cash in the property which serves as our rather large deposit (we will be paying them rent for their part, although I'm not sure that's relevant).

We saw a mortgage advisor today who advised us to obtain a gifted deposit declaration from my parents to increase our chances of being granted a mortgage. However, having read a sample document I'm not sure this is right for our situation - the money is not a gift, and I think my parents were expecting it remain in their name as it's an investment.

My questions are:
1. Should we be getting a gifted deposit declaration or is this a different situation entirely?
2. Without one are we likely to be declined for a mortgage? I'm not working right now so will presumably be classed as my partner's dependent, but I think our credit ratings are good FWIW.

Any advice would be appreciated, this is all new to us so we don't have a clue.

Oh and since I'm already posting - is it worth paying for an independent mortgage advisor (through the estate agent) or should we go direct to the lender (we've already decided on a mortgage)? I'm not sure what the benefits are or whether she's worth the extra £350-450!

Many thanks

Your broker doesn't appear to understand the distinction between a gifted deposit and a loan. Being an estate agent based one, it's not all that surprising. Consult an independent whole of market broker who knows what they're doing for this.

Thrugelmir

Lenders are unlikely to accept any form of loan arrangement particularly if it's of a significant sum.

jennduck

If my parents' cash isn't considered a "gift" ie they want it to remain in their name, will we then by default be looking at joint ownership?

For joint ownership would we need a separate deposit for our share? And would we be unlikely to be granted a mortgage, even if it's small?

I'm really worried now

ExpertAdvice

Thats why you need a good broker so he can answer all your questions. Its worth your money spent. If you dont know about something, you hire services of an expert and pay for it. Especially, when you will be making one of your biggest financial decisions!!!

Anyways, if your parents are 'investing' money in the property then its not a gift as you would be expected to return the money plus any gains made in the property in the future and rent to live in the property.

Lenders dont accept loan as a deposit. Also, any monthly payments towards the loan would reduce your affordability.

Yes, you can buy jointly with them but many lenders allow a maximum of 2 applicants. Deposit can come from one person. Doesnt have to come proportionately from both. However, joint income should meet the affordability criteria.

Not sure what the property price is but if 22% borrowing is below £25k then alot of lenders will not entertain it either.

amnblog

You, and possibly your parents have misunderstood is you believe you can approach this situation is this manner.

An investment is one thing, a home for you another.

The broker you have met has not assisted you correctly - avoid any broker in an estate agency.

You and your parents need to get proper advise from a whole of market mortgage broker and a solicitor.

Expect the right advice to cost you four figures, saving you much more.

Foxy-Stoat_3

So your parents are buying you a property and you will be paying them rent to live there. Sounds like an regulated Buy To Let is what is required.

Get them to leave it to you in their Will or you can buy it off them when you have saved up enough.

Looks like the "advisor" you have spoken to is trying to get you to commit mortgage fraud in order for them to get the sale.

jennduck

@ExpertAdvice - thank you for your comprehensive reply. we would be borrowing £25k from a lender.

jennduck

@Foxy-Stoat thank you that's really helpful. Can you tell me more about unregulated buy-to-let and what's required?

Pixie5740

It would be a Regulated BTL if your parents were going to buy to let to you but that's now the scenario you are describing.


I think you need to re-think your plans. If your parents want to invest money then they should look at other investment vehicles, not your home.

chanz4

Also no housing benefit claims