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

Strummer22

GwylimT wrote: »

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?

deejbk01 wrote: »

Well it's trickling into savings towards a deposit. However at the same rate my savings increase, the prices of properties increase. I've been £10k short for nearly two years, even with saving a good amount each month. It's like trying to catch someone who's equally fast as you and has a headstart

Another reason you might be able to afford the loan repayments after getting a mortgage but not be able to save is that the mortgage would often cost less than renting.

Getting a mortgage can make such a difference to people's finances. You might need to pay £800 p/m on rent and scrimp to save anything on top of that to build up a house deposit, but once you buy the mortgage might be £600p/m and you don't have to save for a deposit! Your higher rent is demonstrably affordable as you haven't been evicted for rent arrears, but you may be told the lower mortgage payment is unaffordable due to the threat of interest rate rises. It hurts.

That said, you can't get your dad to take that loan. Telling the mortgage provider it was a gift when in fact you have to pay it back is indeed fraud and a Very Bad Idea.

What kind of place are you looking to buy? You may have to settle for the very cheapest the local market has to offer, and view your slightly rubbish first home as your deposit for the home you want. At least then your mortgage payments are building up the equity you need.

ABBF08291

On this subject, how important is it to a lender to know the complete trail of a gift (true gift) from an eligible giftor?

For example, if the buyer requires a deposit of £50k and that buyers father gifted their son/daughter eg 50% / £25k of it, and the father got the £25k by getting a secured loan / remortgaging his own house etc, does the lender care that much where the giftor got the money?

(This is asked on the basis that the father would confirm via a legal document that the £25k gifted was indeed a true gift and in no way or form a loan to his child and that he would not at any point expect any repayment of this, ever).

I ask because, in my community circle at least, it is entirely common that mortgage free parents / parents with several properties would routinely help their children with their deposits by remortgaging their own properties in order to release equity which they can then wholly gift their sons/daughters helping them onto the property ladder.

I wanted to know whether this practice has now become harder in recent years?

Keep_pedalling

deejbk01 wrote: »

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

We don't have gift tax in the UK, so no. That only time that comes in to play is if the giver dies before 7 years have past, and only then if they have assets over the nil rate band.

Pixie5740

ABBF08291 wrote: »

On this subject, how important is it to a lender to know the complete trail of a gift (true gift) from an eligible giftor?

For example, if the buyer requires a deposit of £50k and that buyers father gifted their son/daughter eg 50% / £25k of it, and the father got the £25k by getting a secured loan / remortgaging his own house etc, does the lender care that much where the giftor got the money?

(This is asked on the basis that the father would confirm via a legal document that the £25k gifted was indeed a true gift and in no way or form a loan to his child and that he would not at any point expect any repayment of this, ever).

I ask because, in my community circle at least, it is entirely common that mortgage free parents / parents with several properties would routinely help their children with their deposits by remortgaging their own properties in order to release equity which they can then wholly gift their sons/daughters helping them onto the property ladder.

I wanted to know whether this practice has now become harder in recent years?

Parents can still, quite easily, gift their children money towards a deposit. The imperative word being "gift" as in giving the money and not expecting it back, giving the money and signing a document for the mortgage lender declaring that it is in fact a gift and not a loan.

What the OP is proposing is borrowing the money and pretending to the mortgage lender that it's a gift.