Gift Deposit but not a gift help

josh263

Okay so long story short I'm self employed less than a year my girlfriend has a full time job
we are buying a house house is £125,000 the mortgage is in my girlfeidns name only her montage my dad is giving us £40,000 as a gift with no monthly payments the mortgage was accepted but was lost in translation that my dad wanted a charge on the property a second charge so behind the mortgage lender as he has to give it to my girlfriend and not me so wants the charge in case we spilt for what ever reason and its my inheritance gone so our solicitors had to go back to mortgage lender and inform them of the charge we are worried this will make them say no Does anyone have any info on weather it will change there decisions

da_rule

It could have implications as it is no longer a gift. It is a loan, secured against the property. Even if it is a second charge.

Did you have a deposit before the £40k? As they could knock down your LTV. Something else to consider is that if your dad has already signed a gifted deposit declaration he would have signed to say that the money is a gift, does not need to be paid back and he has no interest in the property. A charge is an interest in the property.

Thrugelmir

Lender may well not like the source of the deposit. Given you are not party to the mortgage application. The charge makes it appear a loan. Which adds further complications. Lenders policies tend to be quite restrictive in such circumstances. The adage "after the horse has bolted springs to mind".

josh263

He has no intrest in monthly payments and no interest in the property just wants to secure the money for me as its being given to my Girlfriend and not me so he only wants to make sure if we spilt up for what ever reason she sells and gives him the 40 back the bank are only lending us 85 so would they not see it as its 85 is all we need back and have no interest in weather my dad is paid or not

da_rule

A charge against a property is an interest in the property.

The fact he is not charging interest, or asking for monthly payments is irrelevant. There will be a provision on the title that he is entitled to a certain amount from the proceeds of sale (whether thats a fixed amount or a percentage). When you come to sell the property you will either have to pay him back, or he will have to pretend that you did. Likewise, if you ever manage to get added to the title he could release the charge without you having to pay him back.

Has he already signed a gifted deposit declaration?

getmore4less

The money is being offered as a secured loan

gifts have no conditions

kingstreet

Most lenders will not accept a gift from a non-blood relative.

josh263

I will be added to Mortgage in Feb 2018 when i have been trading two years he's not signed anything and the bank have already accepted the mortgage for us but it got lost in translation that he's putting a charge on the property then our solicitor got a letter from my dads solicitors and ours claimed he didn't know about the charge he did so has told us he has to inform RBS the Lender and they have to re evaulate But don't get why they would change there mind just my solicitor said they could do

glosoli

The solicitors letter to your lender will likely be referred to the banks legal department/underwriting team for further consideration, you will just need to keep your fingers crossed and wait and see what they say.

kingstreet

RBS criteria;-

Family Gifted Deposits (Cash Gift)

We accept deposits (and gifts) from parents and guardians and treat them as if they were the applicant's own deposit. This applies even where the money is advanced against a formal loan agreement or a second charge is put in place to secure the parents' rights.
Third Party Gift

Gifts from third parties (not sellers/vendors) are an acceptable source of customer deposit, but only where there is no repayment required. We will require a signed letter from the third party confirming they have no interest in the property and that there will be no repayment required. The letter must be addressed to RBS, confirm the amounts and confirm who money is coming from and who going to and relationship to customer.

So this is all going to hinge on how the lender views the non-blood family relationship as I said.

josh263

Yeah we are sat here fingers crossed just hoping they don't mind so much as its not a massive amount and the fact there money is still very secure as they have first charge