Loan to borrow query

Pw1986

My mother has just been refused a loan for money to help me get on the property ladder, I need some extra funds and my mum said she would get a loan and she would gift me the money and I could pay her back whenever no rush at all however the bank refused the loan, I believe my mother said she would be lending me the money and she was rejected for a loan for legal reasons apparently due to giving the money for property buying, would this be a proper reason or has my mum not worded her intentions right? As the money would of been transferred to my account and all the house dealings would be with me she would not of been involved except using her money, she was told if she said the loan was for a car she would of been accepted immediately.Looking for some advise where should we go from here, the property I'm interested has a time limit to it so I need this money for a deposit and was grateful my mum would be willing to give me money to help me get on the property ladder. Should she just go online and apply again? Would Internet banking allow her to transfer thousands over to bank account?

Gaz83

Sounds like she's worded her intentions perfectly.

Lenders won't accept a loan as a deposit.

You've said it yourself - you "could pay her back whenever no rush at all". That's not a gift. That's a loan.

ReadingTim

Your Mum has worded her intentions perfectly correctly, but has perhaps been penalised for being too honest. Lenders won't accept loans as a deposit, as mentioned above.

However, lenders rarely check whether the loan has been used for the stated purpose - the bank hardly asks to see the new car, or kitchen you've bought with a loan does it?!? And as long as you keep up the repayments, it's hardly going to have a problem.

The problem is that your Mum will have to sign some statement saying that the money (loan) is a gift, and she has no expectation of repayment for your bank to grant you a mortgage. Not a problem for you, but equally, there's nothing to stop you from simply not repaying your Mum, and skipping off with the money. I'm not suggesting you would, but that's the risk for your mother.

Finally, this loan repayment is going to have to be added to the mortgage payment you'll be making, potentially meaning things are going to be quite tight - and they're usually tight enough the first time you buy a house as it is!

Are you sure you can afford these repayments? The problem is that if you can't, your Mum loses her cash and means of repaying her loan, and you lose your house.

foxy-stoat

If you want to advise your Mum to lie on the application form to get the loan approved, then its up to you. Thats the first issue.

If your Mum is happy and can afford to keep up the repayments until the loan is paid back then its up to her. If you can repay her then good luck.