Gift from parents used as part of deposit

jack2430

Hi Guys,

My parents have given us half of our deposit as a gift to help us secure a mortgage. They have taken out a personal unsecured loan in order to this. This is a gift and we don't have to pay them anything back or make any loan payments as its entirely in their name. Will mortgage companies have an issue with this source of funds?

Thanks in advance

Harryp_24

jack2430 wrote: »

Hi Guys,

My parents have given us half of our deposit as a gift to help us secure a mortgage. They have taken out a personal unsecured loan in order to this. This is a gift and we don't have to pay them anything back or make any loan payments as its entirely in their name. Will mortgage companies have an issue with this source of funds?

Thanks in advance

They will want to know where it came from, why it was gifted, as it is a loan i doubt they accept it as a gift but more of a loan. not sure though.

kingstreet

It's their loan, not yours.

There will be no issue.

Placitasgirl

It is highly likely that you'll be asked to evidence where the funds came from as part of usual money laundering and affordability checks.

Given that your parents are "gifting" you a loan I believe that many mortgage companies will have an issue with this and will not wish to proceed on that basis. In simple terms it's lending to be able to help you to afford to borrow money in the form of a mortgage.

a&akay

When we gave our daughter cash to cover the deposit on her house, Halifax required that this was given 'without reservation' ie we had no call on its ownership. A letter to that effect resolved this.

jack2430

Thanks for the replies everyone! I should add more info. We already have a mortgage offer and are getting ready to exchange in the next day or so. The mortgage provider were happy with a letter from my parents stating it was a gift and didn't need repaying etc.

It's the solicitor that's now asking for this again and also for the source of the funds before we exchange.

davidmcn

jack2430 wrote: »

Thanks for the replies everyone! I should add more info. We already have a mortgage offer and are getting ready to exchange in the next day or so. The mortgage provider were happy with a letter from my parents stating it was a gift and didn't need repaying etc.

It's the solicitor that's now asking for this again and also for the source of the funds before we exchange.

And have you previously told the lender that your parents were borrowing?

It shouldn't be a problem anyway, as all the solicitor needs to do is satisfy themselves as to the source of funds (which for money-laundering purposes is easily done if it's a loan advance from a recognised lender). The standard solicitor instructions don't require them to notify the lender merely because it's a loan to the parents, but I think we've had a previous thread where somebody's solicitor thought they did need to check with the lender.

amnblog

Placitasgirl wrote: »

Given that your parents are "gifting" you a loan I believe that many mortgage companies will have an issue with this and will not wish to proceed on that basis. In simple terms it's lending to be able to help you to afford to borrow money in the form of a mortgage.

This is not the case. As long as the funds are from a legal source.

Boredatwrork

As others said. You have recieved a gift and the house is to be in your name.

How your parents got it and their financial situation and choices is their problem. Not yours or your solicitors.

A letter from them explaining it was a gift (no need to mention where they got the funds) should suffice.