Mortgage deposit proof of funds.

TheRB

Hi everyone,
This is my first post here.
We're looking for some advice on our mortgage deposit.
We are in the process of our mortgage paperwork and the purchase of buying our first house. We've raised 5% from savings. This then shifted to 10% due to a couple of blemishes on my credit history.

My partners parents have offered to help us by lending us the remaining 5%.
For the purposes of our application, the money is a gift. Between ourselves the money is a loan and we will be paying it back but they have been really understanding about the timeframe to help us out.
The problem is this. Partners parents are based in the Netherlands, and in the Netherlands gifting of over 5000 Euros is subject to a hefty tax (around 25-30% I'm told). They have paid tax on this earning over their lifetime, so of course, we all agree that for them to be footing a hefty tax bill for helping us is unfair. We cannot afford to pay this tax bill either.

For this reason they will not sign a gifting letter to satisfy the mortgage lender. We do not want to declare this money as a loan because we are concerned that, as an extra outgoing, it may alter our financial status for being approved on the mortgage, and all of our financial details will then have to be re-evaluted and checked, and this may affect our mortgage approval chances and in the worst case scenario, mean we are not eligible.

My partners parents are fairly black and white and believe that money is money and its nobodies business where the money came from - of course its not quite as easy as this from our perspective.
So we are now in a situation where we have the money (around £14,000) sitting in a Dutch account ready to add to our £14,000 saved.
The problem is getting it into our UK account and then showing the proof of funds to the mortgage company.

Simply depositing this will be scrutinised under the money laundering rules, which we appreciate.
So are there any ways around this?
Options to consider?
1) Sale of an asset such a car to account for a substantial amount of this money.
2) Depositing all of our earnings from our salaries into our savings accounts and using the equivalent from the gifted money to live on. This will boost our provable accumulated savings by around £4000 a month.
3) Finding another friend or relative with savings to gift us the money and sign the letter we need and returning them the balance from the money we are holding but cannot use directly for the deposit.

The rules don't seem to have any precise criteria, which doesn't help us much.
Can anyone suggest anything to help us?

Thanks in advance.

[Deleted User]

You seem to be considering an awful lot of fraudulent activities to get this deposit through.

ACG

I am all for pushing boundries but you are even looking at tax evasion or Mortgage fraud.

There is a better alterative...find a new lender who will either lend 95% or will accept a loan as a deposit.

csgohan4

perhaps save more for a deposit than relying on mortgage fraud.


Perhaps you are pushing things to the limit at the moment. Keep saving up, your getting there.


Perhaps consider a broker to see if you can be matched to a lender

Thrugelmir

TheRB wrote: »

The rules don't seem to have any precise criteria, which doesn't help us much.

Why potentially tarnish your reputation for the sake of €5,000. You may find yourselves on file with a service that the majority of lenders subscribe too.

http://www.nhunter.co.uk/

sulphate

I'm afraid what you are proposing is technically fraud. Your solicitor also acts for the mortgage lender and unless they get the required paperwork which would include a letter confirming the money is a gift your purchase will not go ahead.

TheRB

Thanks for all of your feedback. Blimey! Sounds a bit full on: fraud and evasion.
We're not for that either. Just trying to see what works and fits for our situation within the framework of the law.
I guess we'll have to speak to our solicitors and failing that, our broker to see what can be done.

hounsehunterftb

TheRB wrote: »

Thanks for all of your feedback. Blimey! Sounds a bit full on: fraud and evasion.
We're not for that either. Just trying to see what works and fits for our situation within the framework of the law.
I guess we'll have to speak to our solicitors and failing that, our broker to see what can be done.

We just got gifted deposit funds from abroad and showing statements for the proof of funds. There was no extra cost whatsoever apart from international wire transfer fees & incoming bank transaction fees. So what taxes are you talking about.

Honestly even we evaluated our options while pursuing for gifted deposit. But nothing is worth tarnishing your credit history and reliability. No point risking anything if you are serious about home buying!

davidmcn

hounsehunterftb wrote: »

what taxes are you talking about.

The Netherlands ones they mentioned in the OP:

Partners parents are based in the Netherlands, and in the Netherlands gifting of over 5000 Euros is subject to a hefty tax (around 25-30% I'm told).

AnotherJoe

Will the lenders accept an open ended loan as deposit, payable back only upon sale of house or remortgage? Proper agreement drawn up stating these conditions of repayment.
Nationwide and Santander accepted this for my daughter. Not all lenders will.

That way, its a loan, so Dutch authorities dont want tax, and it doesn't need monthly repayments so doesn't affect your affordability.

TheRB

AnotherJoe wrote: »

Will the lenders accept an open ended loan as deposit, payable back only upon sale of house or remortgage? Proper agreement drawn up stating these conditions of repayment.
Nationwide and Santander accepted this for my daughter. Not all lenders will.

That way, its a loan, so Dutch authorities dont want tax, and it doesn't need monthly repayments so doesn't affect your affordability.

This is a good avenue to pursue. Thank you.