Borrowing deposit money from dad so that he benefits too. How to approach this

mattk1uk

Hey everyone,

I’m looking for a bit of advice on how to approach this. Here goes..

So my dad has £7,000 he’s not sure where to put as he says the interest on ISAs is fairly rubbish at the moment so this got me thinking (which is always dangerous ha ha). He is willing to put that money somewhere and not touch it for a couple of years.

I’m currently trying to save for a house and I’m eligible for the first-time buyer ISA deal from the government.

The house I’m interested in buying is for sale at £85,000 so I was thinking how could I put this to my dad in such a way that I would borrow this money and put it into a first-time buyer ISA for my deposit and then I’ll pay him back over a period of time at a better interest rate than he would get in a bank elsewhere?

Appreciate any tips here guys, if it’s a stupid idea please do say so but if it can help both him and me out then great

Thanks!

marliepanda

You can't put 7k in an htb isa that fast. That's the main issue. You can pay in £1200 at first then 200 a month, so it's gonna take you upwards of three years to pay that in.

Not sure on the lifetime isa rules, but they're similar. You can't just drop in 7k.

Pixie5740

LISA only allow you to pay in a maximum of £4,000 a year and there are only S&S LISA available at the money, not cash.

Borrowing the money could also reduce your mortgage affordability.

If your dad wants to make his money work harder then he shouldn't have it sitting around in cash. There are lots of better alternatives.

teddysmum

On such a small sum, your dad could earn as much as 5% (more than the mortgage rate) by using current accounts and regular savers.

AnotherJoe

mattk1uk wrote: »

Hey everyone,

I’m looking for a bit of advice on how to approach this. Here goes..

So my dad has £7,000 he’s not sure where to put as he says the interest on ISAs is fairly rubbish at the moment so ....

... why is he using an ISA then? Instead he should use high interest current accounts. He'd only need 2 maybe 3.

Cakeguts

It won't work. You have to have the deposit as money that does not have to be repaid. You can't borrow the deposit even if it is from your Dad. If you get the deposit from your Dad it has to be a gift and he can't expect to get it back.

If you can't save the deposit for a house on your own you are not ready for home ownership. When you own a home you have got to have a lot in savings to pay for repairs and to be able to pay the mortgage if you lose your job. There are no benefits that you can claim to pay a mortgage so if you are not able to pay it for a long while you may lose the house.

Saving for the deposit is practice for saving when you have bought a house.

dimbo61

Check out the Barclays springboard Mortgage scheme.
Dad put 10% into a savings account earning 1.75% for 3 years and you get a 100% Mortgage fixed at 2.99% for 3 years !
2.79% if you have a 5% deposit fixed for 3 years

G_M

You say

this got me thinking (which is always dangerous ha ha).

Not sure why thinking is dangerous. Or amusing.

Though after reading the rest of the post maybe you're right after all!

mattk1uk

Thanks for all the replies guys, wasn't expecting so many!

Hmmm guess it's back to plan A then.. keep working and saving (and buying lottery tickets )