Mortgage deposit gift with outstanding student loan debt.

Skye_Spirit

Hi all,
Apologies if there's a thread on this already ( I couldn't find one!)

I'm 41 and single (yes I know)
I graduated with a BA degree in 2013 and have yet to pay back any of my student loan, as I was only working part time.
I've just secured a permanent job and will soon start contributing to my student loan debt.
My parents are planning on gifting me £50,000 to go towards a deposit for a mortgage.

Will I be able to use the entirety of this money for my mortgage or will I have to use some of it towards my student loan debt? The deal from my patents is that the money is to go into bricks and mortar and aside from that I desperately need it to boost my mortgage potential as my salary is not great!
Help and suggestions please!
Thanks.

betmunch

The 50k is deposit.

The monthly repayment of the student loan is considered a commitment and could impact on how much you can borrow

Skye_Spirit

Thanks for the quick response.. 😀

Yes, it was my understanding that my monthly loan repayment could affect the amount I borrow but just to clarify..I should be able to keep all of the £50, 000 for my deposit? (Sorry! 😄)

betmunch

Skye_Spirit wrote: »

Thanks for the quick response.. 😀

Yes, it was my understanding that my monthly loan repayment could affect the amount I borrow but just to clarify..I should be able to keep all of the £50, 000 for my deposit? (Sorry! 😄)

I'm not sure I can clarify further so will just repeat.

The 50k is deposit

Skye_Spirit

Thanks again for the response 😊

Strummer22

Skye_Spirit wrote: »

Thanks again for the response 😊

I think I can clarify further:

Your student loan repayments will only ever come out of your earnings. If you earn above the threshold, some of your pay is taken at source (if you're on PAYE) and you only see it as a deduction on your pay slip.

The student loan company can't raid your bank account. Full stop. The 50k will be yours to do what you like with (buy a house, of course!).

Watch out that you don't get stung by inheritance tax. Read https://www.gov.uk/inheritance-tax/gifts.

Maximum_Saving

You could use the £50,000 for your mortgage deposit. When you apply for a mortgage you will show all your financial details including your payments of the student loan. The student loan company won't raid your bank account. I suggest you check your payments for your student loan. Good luck on buying a house.

Skye_Spirit

Thank you both for your comments. 😀

It's certainly not easy to obtain a mortgage these days, especially if you're the sole applicant. I was delighted when my parents kindly offered to gift me the money BUT then my student debt popped into my head and I got 'the fear'!
I will, of course, look into this properly but just wanted to see what opinions were out there.

Oh and yes.. inheritance tax will be the next hurdle!

Thanks again everyone for commenting! 😊

dimbo61

Ask mum and dad for £1,000 now and start a Help to Buy ISA.
Once you have £1,600 saved you can claim the 25% extra the government pays into the HTB ISA so only 2/3 months.
The more you save the greater amount you get off the government.
The max they will pay is £3,000

Lungboy

Inheritance tax isn't an issue at all. If your parents die within 7 years it is counted as part of their estate and it will be the same as if you inherited it normally.

You will need to get a letter about the gifted deposit for the mortgage company.

Strummer22

Lungboy wrote: »

Inheritance tax isn't an issue at all. If your parents die within 7 years it is counted as part of their estate and it will be the same as if you inherited it normally.

Right - so they would have to pay inheritance tax on it (if the estate is of sufficient value). If the OP knows this is a possibility, they should expect it rather than it coming as a complete surprise.