Should my dad lend me £10k so that I can afford a house

deejbk01

Hi,

I am about 10k short of buying a house in the area I want to live in, and I am wondering how viable it would be for my dad to take out a 10k loan with M&S to lend to me, I would effectively cover the payments. It looks affordable and at 3.3% the total interest over 48 months would be £600 which isn't horrible if it helps me to buy a house. Looking at my budget, and approximate mortgage payments, it looks like a plan. Is this a good idea?

Can you just go and transfer 10k in someone else's account in trust of repayment, or would it need to be made more formal somehow?

Malmo

This is not a sensible plan.

The source of the funds will be queried and lenders will not want to do business with you if your funds are coming from a loan, irrespective of who's name it is taken under (you or your family).

Jox

It would be better to say it is a gift not a loan and your dad would have to write a letter saying that he had gifted it to you and where he had got the money from.

beecher2

Not a sensible plan - save the £600 a month and delay purchasing until you can afford it.

GwylimT

Lenders wont be overly happy about £600 of your monthly income being used to pay a loan; nor the fact that a lump of your deposit is a loan.

If you actually had £600 spare each month it would have been saved up towards your deposit.

Jox

I think the £600 refers to the amount of interest, not the monthly repayments.

GwylimT

Jox wrote: »

I think the £600 refers to the amount of interest, not the monthly repayments.

Ah yes, silly me!

Still though, OP if you have spare money to pay a loan, where is all this spare money that you haven't needed to spend in the last few months or maybe years?

beecher2

Jox wrote: »

I think the £600 refers to the amount of interest, not the monthly repayments.

I thought that too at first but am so bored that I checked the M&S website, and it is the payment which would be due over 18 months.

Jox

I just looked at M&S website too and it said £10k loan over 48 months is £222.45 @ 3.3% interest but there is no guarantee that OP's dad would get the 3.3% interest rate is there?

deejbk01

Jox wrote: »

It would be better to say it is a gift not a loan and your dad would have to write a letter saying that he had gifted it to you and where he had got the money from.

But wouldn't that mean having to pay tax on it as it's over £3000

beecher2

Doh, I thought repayments were over 18 months!