Gift from mother in law from a bank loan.

jinkssick

Asking for a friend. His mother in law wants to take out a bank loan to let her daughter and him use it as a deposit on a first house. If mother in law says  it is a gift using Gift Deposit Letter via right channels aka solicitor. Is this ok? Or would it scupper their mortgage application?

[Deleted User]

As a general rule the lenders only care if the applicants are getting a personal loan in their name.  As long as the giftor signs the appropriate forms to say that it is a pure gift then it shouldnt cause any issues.

For what its worth,  if they want to do it as a loan from mum then some lenders are ok with this as long as the monthly repayment is factored in to affordability 

520d2012

I think it depends on the lender - some simply ask for a letter stating this is a gift and the person giving it doesn’t expect it back and doesn’t expect a share in the property.
Some like to see the source of funds and you might want to be careful if your mother in law takes a loan from the bank who you’re going to take a mortgage with - especially if she loan is for something else.

davidmcn

In principle it should be fine, though it may raise suspicion that it is in fact a loan to daughter rather than a gift (something which is going to cost mum repayments every month is a bit different from her passing on a lump sum which was just gathering dust in her savings account).