Changing deposit from property sale funds to gifted funds

logface100

We have been going through a protracted sale in a chain. Due to exchange in a few days but the buyer of our flat has pulled out collapsing a chain for 3 people. Our deposit money was from the sale of our property (£55,000). We really want to buy this property (a house) and also don't want the chain above us to collapse because of our buyer's (quite frankly scandalous) behaviour. We believe we can raise the deposit via our own savings and parental loans/gifts. The question is - would this affect our mortgage. I assume it would but is it likely they would accept this? Would it be possible to do all this very quickly - in a matter of 1 or 2 weeks say? Any extra info on things we may not have thought of welcome. We are aware of the increased stamp duty. We can afford to live in the two properties until we sell the flat.

Thrugelmir

May well be a condition of your new mortgage offer that the old one is discharged. 

MWT

logface100 said:

...and parental loans/gifts.

If they really are loans not gifts, which does seem to be the more plausible of the two in the circumstances, then that, together with the continuing mortgage on your current property may put quite a strain on the affordability calculation...

logface100

So a gift would be better?

MWT

logface100 said:

So a gift would be better?

If it really is a gift, then yes, otherwise it would be fraud to pretend it is a gift when it isn't, but I'll leave that up to you...

Even with the gift, you will still need to pass the affordability tests with the additional mortgage still running, so talk to your broker and see what they say as it would be better to keep everything honest and accurate, so don't rush for the frankly less than believable options before you've found out if that is even a problem.

housebuyer143

Most lenders take gifts from close family so it shouldn't be a problem at all. They will need to sign that it's a gift, it must be a gift. 

Whether you pay it back when the house sells out of the goodness of your heart is up to you, but the agreement would be informal.

I have just done the same thing for the same reason so it's possible. They will need to change the source of deposit on the mortgage and expect your solicitor to charge you more money for the privelage 🙄

If you have a mortgage on your current house though it probably won't work as no lender would be keen to give a 2nd residential mortgage.

[Deleted User]

Pretty much all lenders give 2nd residential mortgages.  How they calculate affordability greatly differs though 

Also a lot of mainstream lenders will allow a charge to be registered to protect the money being given.  Doesn't have to be a gift.