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Family loans
ferdjunior
Posts: 2 Newbie
in Loans
Hi ,
I’m thinking to buy a property and I’ll have to borrow money from my family . My family lives abroad. This is not a gift and I’ll have to pay them back with interest. I would like to know if I’ll have to pay capital gains or other tax in the Uk, if I need to comunicate this to my bank etc or if I can simply transfer the money in my UK bank account. Many thanks
I’m thinking to buy a property and I’ll have to borrow money from my family . My family lives abroad. This is not a gift and I’ll have to pay them back with interest. I would like to know if I’ll have to pay capital gains or other tax in the Uk, if I need to comunicate this to my bank etc or if I can simply transfer the money in my UK bank account. Many thanks
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Comments
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A good rule of thumb is never borrow money from your family. It rarely ends well.
Secondly, most mortgage lenders won't accept the deposit from borrowed money. They will ask if it's a gift or a loan, and may refuse if it's a loan.1 -
I agree 100% with above. Have also had experience with a family member lending to another family member and relationships were strained.0
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Is this deposit or the full amount you are borrowing?
Others have already covered the 'never borrow money from friends or family as it can end in tears' aspect. I can only agree - we see stories on here all the time about it going wrong, causing family rifts etc.
There is no tax for a borrower to pay on a loan and you only get hit with capital gains, when you sell, if it is not your primary residence. The family charging interest should be declaring that to the tax authorities in their country but that is not your problem.I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
& Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
All views are my own and not the official line of MoneySavingExpert.0 -
And if you tell them it's a gift the majority of lenders will want a letter from the person who is "gifting" you the money to state it is a gift free of any ties and they will have no interest in the property.DrEskimo said:A good rule of thumb is never borrow money from your family. It rarely ends well.
Secondly, most mortgage lenders won't accept the deposit from borrowed money. They will ask if it's a gift or a loan, and may refuse if it's a loan.
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You should not use borrowed money for a house deposit. Lenders will not accept it purely because the amount you borrow is subject to affordability criteria and if you have a family loan on top this reduces the amount you are able to borrow.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0
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