Remortgaging to Repay Gifted Deposit - Disputed
TJB24
Posts: 44 Forumite
Hi All,
I am a 23 year old young professional. Two years ago, my parents very generously offered me a loan of £67,000 to help with buying my first property. I had saved hard myself and so was approved to buy a single bed property with the deposit I had.
My parents offered me the extra funds as a top up, with the purpose of buying a two bed property that I could then sub-let to a lodger. My father signed a waiver to the bank declaring it as a gifted deposit (i.e. they do not expect repayment). However we had a gentleman's agreement that I would repay them at 1% interest over 20 years, using the proceeds from the lodger. We do not have a written contract, except for emails. It was made clear that I could take payment holidays if needed, and was not expected to pay back the full loan before they passed away. I expressed that I wished to do so if possible.
Two years later, my parents are now looking to buy a larger home themselves. However, neither of them work currently and their income is drawn from my father's inheritance. Unfortunately they were declined for a mortgage a few months ago, as the inheritance income does not come from a limited company.. Both of my parents are in their mid 50s so cannot yet collect a pension.
To deal with this, they have now called in the loans to both myself and my brother. They have requested that I remortgage my home in order to pay back the majority of my outstanding loan to them. My older brother has already done so and repaid his entire loan to them. They have also borrowed heavily from a family friend. I have suggested that one of them works full time for a year, gets a mortgage and then quit the job - using the inheritance income from then on - unfortunately they have refused.
I have recently been promoted, however on a temporary term only and there is no guarentee I will get a permanent contract - without which I cannot refinance.. If I did, according to online calculators I could borrow a maximum of an extra £48,000 to overpay my parents.I have however just remortgaged myself as my original 2 year term expired, and am now on a 5 year fixed.
As this would be at a much higher interest rate, the opportunity cost between overpaying my parent's loan and the bank is an increase of about £20,000 over the remaining 30 year term to the bank. If interest rates rise during that time - as they almost certainly will - so will the interest.
My understanding is that a bank is very unlikely to accept a remortgage if it is to make a gift to a family member. As my parents signed the gifted deposit waiver, the private loan likely won't be recognised. The alternative would be to seek a mortgage advance with my current provider. If accepted, it would take months for my promotion and advance to come through. With a mortgage advance I would effectively have two seperate mortgages which would not match up, meaning I would likely spend around one year on a standard variable rate before I could fully remortgage.
I have tried to explain the difficulties to my parents, who have taken it as my refusal and instead demanded my life savings, which I had saved from my promotions to pay for a part-time university degree. If I take out a student loan this would considerably add to my exposure to very high interest repayments.
I would be sincerely greatful for any advice. Sadly, my relationship with my parents has deteriated considerably, and we have not spoken for about six weeks.
I am a 23 year old young professional. Two years ago, my parents very generously offered me a loan of £67,000 to help with buying my first property. I had saved hard myself and so was approved to buy a single bed property with the deposit I had.
My parents offered me the extra funds as a top up, with the purpose of buying a two bed property that I could then sub-let to a lodger. My father signed a waiver to the bank declaring it as a gifted deposit (i.e. they do not expect repayment). However we had a gentleman's agreement that I would repay them at 1% interest over 20 years, using the proceeds from the lodger. We do not have a written contract, except for emails. It was made clear that I could take payment holidays if needed, and was not expected to pay back the full loan before they passed away. I expressed that I wished to do so if possible.
Two years later, my parents are now looking to buy a larger home themselves. However, neither of them work currently and their income is drawn from my father's inheritance. Unfortunately they were declined for a mortgage a few months ago, as the inheritance income does not come from a limited company.. Both of my parents are in their mid 50s so cannot yet collect a pension.
To deal with this, they have now called in the loans to both myself and my brother. They have requested that I remortgage my home in order to pay back the majority of my outstanding loan to them. My older brother has already done so and repaid his entire loan to them. They have also borrowed heavily from a family friend. I have suggested that one of them works full time for a year, gets a mortgage and then quit the job - using the inheritance income from then on - unfortunately they have refused.
I have recently been promoted, however on a temporary term only and there is no guarentee I will get a permanent contract - without which I cannot refinance.. If I did, according to online calculators I could borrow a maximum of an extra £48,000 to overpay my parents.I have however just remortgaged myself as my original 2 year term expired, and am now on a 5 year fixed.
As this would be at a much higher interest rate, the opportunity cost between overpaying my parent's loan and the bank is an increase of about £20,000 over the remaining 30 year term to the bank. If interest rates rise during that time - as they almost certainly will - so will the interest.
My understanding is that a bank is very unlikely to accept a remortgage if it is to make a gift to a family member. As my parents signed the gifted deposit waiver, the private loan likely won't be recognised. The alternative would be to seek a mortgage advance with my current provider. If accepted, it would take months for my promotion and advance to come through. With a mortgage advance I would effectively have two seperate mortgages which would not match up, meaning I would likely spend around one year on a standard variable rate before I could fully remortgage.
I have tried to explain the difficulties to my parents, who have taken it as my refusal and instead demanded my life savings, which I had saved from my promotions to pay for a part-time university degree. If I take out a student loan this would considerably add to my exposure to very high interest repayments.
I would be sincerely greatful for any advice. Sadly, my relationship with my parents has deteriated considerably, and we have not spoken for about six weeks.
0
Comments
-
You have options - sell the property and morally pay back your parents - leaving you in hopefully a better position when you took the gift/loan out to get the property. You can start again in a property you can comfortably afford on your own.
Any other option to repay apart from a lottery win will end in you not being able to support yourself.
Obviously you can choose not to pay them back, which would obviously have a huge negative impact on your relationship with your parents and remaining family.
I suppose you have to ask yourself, what would you do in their position - see it as a gift and leave it at that or take the moral route and expect to get paid by whatever means necessary. You have to think that without their help you would of bought a 1 bed place instead of a 2 bed.0 -
Fraud always comes back to bite you.
Seems it's your decision on wheather it bites you or your parents.
To be honest I don;t know who is being the biggest idiot here! They know a fake gift is not easily repaid. You should not have accepted a fake gift.0 -
To be honest I don;t know who is being the biggest idiot here! They know a fake gift is not easily repaid. You should not have accepted a fake gift.
I assume he was repaying it within the terms of the original gentle agreement - which would of been over many years. Repaying a massive lump wasnt really going to happen so I think the parents should be a little more reasonable.0 -
Hi All,
I am a 23 year old young professional. Two years ago, my parents very generously offered me a loan of £67,000 to help with buying my first property. I had saved hard myself and so was approved to buy a single bed property with the deposit I had.
My parents offered me the extra funds as a top up, with the purpose of buying a two bed property that I could then sub-let to a lodger. My father signed a waiver to the bank declaring it as a gifted deposit (i.e. they do not expect repayment). However we had a gentleman's agreement that I would repay them at 1% interest over 20 years, using the proceeds from the lodger. We do not have a written contract, except for emails. It was made clear that I could take payment holidays if needed, and was not expected to pay back the full loan before they passed away. I expressed that I wished to do so if possible.
Two years later, my parents are now looking to buy a larger home themselves. However, neither of them work currently and their income is drawn from my father's inheritance. Unfortunately they were declined for a mortgage a few months ago, as the inheritance income does not come from a limited company.. Both of my parents are in their mid 50s so cannot yet collect a pension.
To deal with this, they have now called in the loans to both myself and my brother. They have requested that I remortgage my home in order to pay back the majority of my outstanding loan to them. My older brother has already done so and repaid his entire loan to them. They have also borrowed heavily from a family friend. I have suggested that one of them works full time for a year, gets a mortgage and then quit the job - using the inheritance income from then on - unfortunately they have refused.
I have recently been promoted, however on a temporary term only and there is no guarentee I will get a permanent contract - without which I cannot refinance.. If I did, according to online calculators I could borrow a maximum of an extra £48,000 to overpay my parents.I have however just remortgaged myself as my original 2 year term expired, and am now on a 5 year fixed.
As this would be at a much higher interest rate, the opportunity cost between overpaying my parent's loan and the bank is an increase of about £20,000 over the remaining 30 year term to the bank. If interest rates rise during that time - as they almost certainly will - so will the interest.
My understanding is that a bank is very unlikely to accept a remortgage if it is to make a gift to a family member. As my parents signed the gifted deposit waiver, the private loan likely won't be recognised. The alternative would be to seek a mortgage advance with my current provider. If accepted, it would take months for my promotion and advance to come through. With a mortgage advance I would effectively have two seperate mortgages which would not match up, meaning I would likely spend around one year on a standard variable rate before I could fully remortgage.
I have tried to explain the difficulties to my parents, who have taken it as my refusal and instead demanded my life savings, which I had saved from my promotions to pay for a part-time university degree. If I take out a student loan this would considerably add to my exposure to very high interest repayments.
I would be sincerely greatful for any advice. Sadly, my relationship with my parents has deteriated considerably, and we have not spoken for about six weeks.
You have committed Mortgage fraud, not the wisest thing t ogo telling that to the bank0 -
Thanks to comments so far, they are effectively throwing me and my brother under a bus for a house they don't need. It's private to them but this seems to be motivated by their marital difficulties and my mother's mental health.
I'm not exactly inclined to bail them out for something that could end in a divorce settlement six months from now. If they seriously needed help, I would do everything I can to help.
Also as it's a gentleman's agreement there is no formal contract, thus there is no fraud. Legally I don't believe I have an obligation to pay them back anything - but that's not the point.0 -
I wouldn't fuss to your parents about the increase in opportunity cost, but if you can't get a mortgage now, you can't get a mortgage. It's unreasonable of them to demand the money suddenly.0
-
It doesn't need to be formal to be enforceable. And it was fraud to tell the lenders that it was a gift.Also as it's a gentleman's agreement there is no formal contract, thus there is no fraud. Legally I don't believe I have an obligation to pay them back anything - but that's not the point.0 -
That's the end of the story, to be honest.My father signed a waiver to the bank declaring it as a gifted deposit (i.e. they do not expect repayment).
Your parents have no right to repayment at all. That's the risk they took when they conspired with you to commit mortgage fraud. They have no recourse now to demand repayment from you. If they took you to court they would lose. Morally it is up to you what you do. There's no way I would risk bankrupting myself just because my parents couldn't be bothered to get a job when they are still ten years off retirement age and yet want to buy a bigger house.
Greedy baby boomers yet again. The most selfish generationpoppy100 -
-
So you and the conspired to commit fraud.Hi All,
I am a 23 year old young professional. Two years ago, my parents very generously offered me a loan of £67,000 to help with buying my first property. I had saved hard myself and so was approved to buy a single bed property with the deposit I had.
My parents offered me the extra funds as a top up, with the purpose of buying a two bed property that I could then sub-let to a lodger. My father signed a waiver to the bank declaring it as a gifted deposit (i.e. they do not expect repayment). However we had a gentleman's agreement that I would repay them at 1% interest over 20.
You lied to get the mortgage. Why do you think that that is acceptable?0
This discussion has been closed.
Categories
- All Categories
- 343.2K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608K Mortgages, Homes & Bills
- 173.1K Life & Family
- 247.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards