Deposit - can parents take out loan to gift ?

Ftba.d

Hi all

To secure a mortgage I need £20,000 from somewhere / gifted .

My parents aren’t in a place to have that in savings however can take out a loan as a gift towards me . Of course I will pay the monthly payments but they are saying it would be a gift as if I couldn’t pay it back they would sort it .

My question is , can they take out  a loan to gift me for my deposit and will a gifted deposit be allowed if it’s had to be loaned by my parents to ‘gift’.

Again , for the lender purposes my parents have no intention of me paying it back (however I intend to pay it off monthly and have worked out outgoings etc and this is more than achievable).

any help appreciated .

JohnnyB70

If it’s a gift then there are no monthly payments for you to make.

Maybe I am reading it incorrectly, but is sounds as though it’s not a gift, it’s a loan, that you intend to fraudulently claim is a gift. Hopefully I am just not reading it right, could you clarify?

Ftba.d

No . It is a gift as it stands however I know I will be in a financial position to pay it back even though my parents will not wish for this . It doesn’t sit well with me they are giving such a large amount and getting in debt for it .

however if I do decide to pay it back is considered fraud then of course I won’t move forward with it. My question is , can parents take out a loan to gift someone ? And second question  would be , if I do start to pay them back later on down the line , would it be breaking the law as you have just stated above ?

K_S

Ftba.d said:

Hi all

To secure a mortgage I need £20,000 from somewhere / gifted .

My parents aren’t in a place to have that in savings however can take out a loan as a gift towards me . Of course I will pay the monthly payments but they are saying it would be a gift as if I couldn’t pay it back they would sort it .

My question is , can they take out  a loan to gift me for my deposit and will a gifted deposit be allowed if it’s had to be loaned by my parents to ‘gift’.

Again , for the lender purposes my parents have no intention of me paying it back (however I intend to pay it off monthly and have worked out outgoings etc and this is more than achievable).

any help appreciated .

@ftba.d It is not uncommon for parents to have borrowed (secured/unsecured) money and then gifted it to a child for a deposit and that shouldn't be a showstopper.

Having said, the way you've described it sounds like a loan rather than a gift, which is different. This thread may help understand the difference https://forums.moneysavingexpert.com/discussion/6348376/best-way-to-go-about-gifting-a-house-deposit/p1

Thrugelmir

Solicitor may ask to see the source of gift. This would identify the funds as having been borrowed. Underwriter would naturally take a cautious view of the transaction. 

JohnnyB70

Ftba.d said:

No . It is a gift as it stands however I know I will be in a financial position to pay it back even though my parents will not wish for this . It doesn’t sit well with me they are giving such a large amount and getting in debt for it .

however if I do decide to pay it back is considered fraud then of course I won’t move forward with it. My question is , can parents take out a loan to gift someone ? And second question  would be , if I do start to pay them back later on down the line , would it be breaking the law as you have just stated above ?

If you intend to pay it back then it’s a loan. Declaring that to be a gift is fraud.

I know that some people will downplay the seriousness of committing financial fraud, but it’s really not the way to go.

BikingBud

Ftba.d said:

Hi all

To secure a mortgage I need £20,000 from somewhere / gifted .

My parents aren’t in a place to have that in savings however can take out a loan as a gift towards me . Of course I will pay the monthly payments but they are saying it would be a gift as if I couldn’t pay it back they would sort it .

My question is , can they take out  a loan to gift me for my deposit and will a gifted deposit be allowed if it’s had to be loaned by my parents to ‘gift’.

Again , for the lender purposes my parents have no intention of me paying it back (however I intend to pay it off monthly and have worked out outgoings etc and this is more than achievable).

any help appreciated .

If you are seeking additional funds then you cannot afford the property.

Isn't the real issue that many people try to invent ways to get around the fact that property is unaffordable?

getmore4less

BikingBud said:

Ftba.d said:

Hi all

To secure a mortgage I need £20,000 from somewhere / gifted .

My parents aren’t in a place to have that in savings however can take out a loan as a gift towards me . Of course I will pay the monthly payments but they are saying it would be a gift as if I couldn’t pay it back they would sort it .

My question is , can they take out  a loan to gift me for my deposit and will a gifted deposit be allowed if it’s had to be loaned by my parents to ‘gift’.

Again , for the lender purposes my parents have no intention of me paying it back (however I intend to pay it off monthly and have worked out outgoings etc and this is more than achievable).

any help appreciated .

If you are seeking additional funds then you cannot afford the property.

Isn't the real issue that many people try to invent ways to get around the fact that property is unaffordable?

There are aplenty of people where the income is sufficient but there is no deposit which results in not being able to borrow.

You get a situation where someone on £25k with £5k could borrow £95k but someone on £50k £0 could not.

Bridging the deposit gap can be an issue.

getmore4less

Ftba.d said:

Hi all

To secure a mortgage I need £20,000 from somewhere / gifted .

My parents aren’t in a place to have that in savings however can take out a loan as a gift towards me . Of course I will pay the monthly payments but they are saying it would be a gift as if I couldn’t pay it back they would sort it .

My question is , can they take out  a loan to gift me for my deposit and will a gifted deposit be allowed if it’s had to be loaned by my parents to ‘gift’.

Again , for the lender purposes my parents have no intention of me paying it back (however I intend to pay it off monthly and have worked out outgoings etc and this is more than achievable).

any help appreciated .

Do you have any money to put in?
What LTV are you looking at?

There are 100% products if you have a helper.

have a look at 

https://www.barclays.co.uk/mortgages/family-springboard-mortgage/

parents need to have 10% to put away for 5 years
max mortgage term 35y

Your parents get to keep their money with interest(2.25%), released in 5 years, if you keep up your payments.
https://www.barclays.co.uk/savings/interest-rates/helpful-start-saver/
(tracker so if rates do go up so should their rate)

Mortgage rates are not the best. 

3.7% if you have no money
3.5% if you can put up 5% 

regular 90% 5y no fee is 2.85%

BikingBud

getmore4less said:

BikingBud said:

Ftba.d said:

Hi all

To secure a mortgage I need £20,000 from somewhere / gifted .

My parents aren’t in a place to have that in savings however can take out a loan as a gift towards me . Of course I will pay the monthly payments but they are saying it would be a gift as if I couldn’t pay it back they would sort it .

My question is , can they take out  a loan to gift me for my deposit and will a gifted deposit be allowed if it’s had to be loaned by my parents to ‘gift’.

Again , for the lender purposes my parents have no intention of me paying it back (however I intend to pay it off monthly and have worked out outgoings etc and this is more than achievable).

any help appreciated .

If you are seeking additional funds then you cannot afford the property.

Isn't the real issue that many people try to invent ways to get around the fact that property is unaffordable?

There are aplenty of people where the income is sufficient but there is no deposit which results in not being able to borrow.

You get a situation where someone on £25k with £5k could borrow £95k but someone on £50k £0 could not.

Bridging the deposit gap can be an issue.

So not affordable then.

If you have 50k with enough disposable then you should be able to save the required deposit or is it all those lattes and netflix again?

Them's the rules, I seem to remember a whole load of pain coming home to roost in 2008. 

Mortgage term 35 years