Lending part of deposit from grandparents - advice please!

nicole19922

Thanks in advance for any help you can give - I'm new to the forum!

Myself and my partner have currently saved £4000 in the help to buy ISA'S. My grandparents have offered to loan us £5000 so we can buy sooner, as we are currently throwing away £550 in rent a month. Our thoughts are that if we did buy a house and we paid them back £400 a month, this would be the same as we are doing currently as we pay £400 into the ISA's. Obviously we are looking into all the associated costs and are hoping to budget for that.

Now my question is - we wouldn't have to pay the money back straightaway as my grandparents would want us to wait till we were settled and financially ready to pay back. When looking for a mortgage, would it be acceptable to declare this money as a gift from grandparents and then pay it back later?

I just don't want to lie about it - it will be a gift at first as there is no obligation to pay back straightaway, but we would eventually pay it back. Would they frown upon this?

Thank you!

Person_one

If there is any expectation at all that the money will be paid back, then its not a gift and you would be committing mortgage fraud if you said it was.

You might get away with it, I expect a lot of people tell this particular lie, but would you want to take the risk or have this hanging over you? Technically, you'd be committing a crime.

kinger101

Lend to. Borrow from.

ViolaLass

It's obviously not a gift, as there is an expectation that it will be paid back at some point.

That said, I don't see how the lender would find out.

nicole19922

Thanks for your responses!

I just read this so was unsure:

'Of course, your circumstances could change after your mortgage is approved or several years later, when you're in a better position and able to start repaying the money, at which time there's nothing to stop you 'gifting' the money back again.'

Person_one

nicole19922 wrote: »

Thanks for your responses!

I just read this so was unsure:

'Of course, your circumstances could change after your mortgage is approved or several years later, when you're in a better position and able to start repaying the money, at which time there's nothing to stop you 'gifting' the money back again.'

Would your grandparents be happy to never see the money again?

marksoton

It's either a gift or a loan. It can't be both.

And your deposit is weak.

eddddy

nicole19922 wrote: »

Thanks for your responses!

I just read this so was unsure:

'Of course, your circumstances could change after your mortgage is approved or several years later, when you're in a better position and able to start repaying the money, at which time there's nothing to stop you 'gifting' the money back again.'

It looks like your quote came from the Gocompare website - so I guess you also read para immediately before it:

Most lenders are likely to accept a deposit if it's 'gifted' from a family member, so long you're under no obligation to repay the money - your benefactor will probably be asked to sign something stating they don't expect repayment.

http://www.gocompare.com/mortgages/borrowing-a-deposit/

That's 'no obligation to repay ever' - not 'no obligation to pay back straightaway'. Your grandparents would need to sign a document to that effect.

Pixie5740

Your grandparents will probably be asked to sign a document declaring that it is in fact a gift and not a loan. Would they be happy to do that given it is clearly a loan from what you describe and not a gift?

Cheeky_Monkey

nicole19922 wrote: »

I just don't want to lie about it - it will be a gift at first as there is no obligation to pay back straightaway, but we would eventually pay it back. Would they frown upon this?

Thank you!

Well don't then. You know full well that it will be a lie so I don't know why you're even contemplating it.

Marvel1

Pixie5740 wrote: »

Your grandparents will probably be asked to sign a document declaring that it is in fact a gift and not a loan. Would they be happy to do that given it is clearly a loan from what you describe and not a gift?

I wouldn't if this was me as nothing stopping someone saying it's a gift and not a loan to them, see you signed the document stating so.