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Gifting inheritance/mortgage

(17 Posts)
Majorlyscared1993 Tue 10-May-16 13:24:39

Hello

I inherited some money from a recently deceased relative. My husband at the moment is working and I am not while I am at home with ds. We have found a house we would like to purchase , and the inheritance covers a good chunk of the price (nearly 3/4).

Our problem is this: my husband is able to get a mortgage for the remaining amount quite easily on his salary, but I do not want to be considered for the mortgage as I do not have a good credit history. In this case, banks see it as I am 'gifting' the money to my husband, therefore I would have an interest in the property should things go wrong etc etc

I'm so disapointed that bad decisions I made in my youth are coming back to haunt me and I only have my self to blame. I'm such a fool, but try telling my 19 y/o self that.

My last credit rating was about 650. The debt I was in was quite a small credit card debt, but I defaulted a few times. (Go figure... A bank giving a credit card to a student 😩)

Anyway, I was just looking for some advice/ reassurance that we may still be able to buy the house of our dreams and give ds and baby on the way the home that they deserve.

(And slap me on the wrist for my poor money management!!)

Janecc Tue 10-May-16 14:10:05

If your dh buys the house and put it in his name exclusively, then he will be the mortgage account holder and you will not be credit checked. Inherited money if used for a couple during marriage is considered generally to be part of a shared pot so in this sense, as long as you do not end up divorcing in the near future, ownership of the house is as far as I understand, relatively irrelevant. But in the case of divorce, it would be dealt with on a case by case basis.
However, I would not be comfortable as the beneficiary of the will to do this. You are putting yourself at great financial disadvantage. If you and your husband do divorce, he could end up moving into the house you are intending to buy or at the very least make it difficult for you to access the funds or sell the house and who's to say he will agree to gift the house onto your child or he may end up having more children with a different partner and your ds may never end up owning the house. .
I understand your credit score is pretty shabby. Plenty of people go bankrupt, pick themselves up, start again and eventually end up in a position to borrow. This is not a life sentence. The first thing I would do is to get yourself an independent financial advisor. They will be able to help with this far better than me.
The other thing to consider is that if you as a married couple own a house already, you will have to pay an extra 3% stamp duty on the purchase price. Then once you own the house, what do you intend to do with it? Rent it out? If you do, it may be better off exclusively in your name as you are not a wage earner as there will be tax income. As you are not working, your husband would need to act as your guarantor anyway. If it is a buy to let property, the rules regarding borrowing are far more relaxed and as you are only looking for such a small amount of the value, you may be able to find a lender more readily than you expect. You may have to pay a higher rate of interest and this needs to be weighed against the tax burden.
Also co sided if you intend to go back to work. This income in itself would be a small wage. Alternatively, you could buy the house in trust in your sons name and you will need some very specific advice for that, which I cannot provide. However, you will have to gift this money to your son and not benefit from any rental income as it will be classed as his money and unless you are in s marvellous financial position, I would not do this.
In your position, I would try to buy in my name and write a will specifying the house.will go to your ds. Failing that in joint names.
Consider what I am saying to you now as the slap on your wrist as you are continuing to be naive about money management.

Majorlyscared1993 Tue 10-May-16 15:49:02

Wow! Thank you for your reply. Unfortunately 90 lenders have turned us down on the basis that even though we are married, it looks like I am 'gifting' the money. Which is a shame. Sorry to drip feed no we do not own any property yet, we are first time buyers. If we did purchase the house in the way we wish, I would naturally have some official documentation written up by a solicitor with regards to how much I have invested etc. I have said to lenders and brokers 'but we are married, so in theory if dh and I were to divorce tomorrow, half of that money would be his'.... Which I'm guessing is true? But is irrelevant. Just wanted to say, I'm 23 and I have never done anything like this before, having this sort of money I so so desperately would like to buy a house for us, I'm just so disappointed it's worked out this way

And thank you so much again for replying!!

Pollyputhtekettleon Tue 10-May-16 15:59:09

What? I don't see why the gift of money comes into it at all. I wouldnt be discussing that with the bank. Just transfer it over to him and call it the deposit. When we bought our home my dh couldn't go on the mortgage as had just started a new business so had no proof of income. He sent 20k or so to me to add to my deposit. We are married. It's family money. Move the money to DHs account and go to a mortgage broker. Banks shouldn't care where the deposit came from. Ours didn't ever ask. Also as a rule, don't volunteer information about finances (or plans to have a baby etc) that you haven't been asked. My top tip!

AppleAndBlackberry Tue 10-May-16 16:06:51

Have you tried making a joint application or just assumed you couldn't? I say that because it seems surprising with 75% equity that you wouldn't be able to get a mortgage.

Majorlyscared1993 Tue 10-May-16 16:43:09

Thanks so much for replies. He can get the mortgage, it's the fact that a dependant is providing the deposit the don't like. It's a load of shit. They asked where the money came from and I told them. Maybe I'm just an idiot and I've ruined our one chance of getting a place in a city we normally wouldn't be able to afford. I have spoken to two separate mortgage brokers and both have said the same thing. I'm gutted.

Majorlyscared1993 Tue 10-May-16 16:44:31

We are going to have to try a joint application, but I have defaulted a few times on credit card so I know my credit file isn't up to scratch. I'm sure any rates we get (if any) would be dire. You would think the banks don't want our money... hmm

Janecc Tue 10-May-16 17:03:05

So you were born the year I graduated lol. Ok so what I said is irrelevant. The way I read the post is as an investment for your ds. Not an expert at all as you can tell. What about looking at a 50% equity house instead? You could maybe bump that up to 70%. If you cant do any of this, I would consider buying a smaller flat/house outright and letting it out whilst renting the house you live - you will have to consider the tax implication if you go back to work because you will be paying tax on an income and if you sell it there would be a capital gain. At that point as the tax rules stand, you would perhaps get the house transferred to joint names just before selling. Then you can get your credit score up through being a better bank account user - rental money coming in (I'd use an agent - choose carefully) and maybe eventually get a credit card that you pay off monthly. Then when the house goes up in value you can sell it or get a mortgage on it - advice will be required from an accountant at that point as there are cost implications. Use the surplus either from the sale or the mortgage of the property as a deposit for a home for you.
Alternatively, have you looked into buying the house you want yourself and using DH as guarantor.? Or as others have said, tell a white lie and say the money is his.

Majorlyscared1993 Tue 10-May-16 17:08:27

Thank you, it's very difficult. I just spoke to the mortgage man again and he said that we may have more luck on another property as this particular one is above a shop so brings its own set of problems. Apparently for money laundering they have to know where the money is come from so I'm guessing eventually it would all come out. Arghhhh! So frustrating. The thing is (risk of outing my self here but see it as relevant) we are buying in St. Albans, the property we found is an unusually good price and now I realise why.... Looks like we are going to have to venture slightly further afield. But that's ok. My husband makes ok money but obviously my son and I are dependants and I think all that stuff compounded to scare off any potential lenders sad

Majorlyscared1993 Tue 10-May-16 17:09:59

It was a great year janecc wink

LunaLoveg00d Tue 10-May-16 17:17:23

Get some financial advice about putting the money into safe investments - bonds or slightly higher interest accounts which you can't access.

Clear your debts. Settle any CCJs. Work hard at rebuilding your credit rating. Look at this as a few years' project. Get a credit card and pay it off every month. Get your name on the utility bills, joint account, phone contract. Prove you are responsible.

Five years' down the line, you have rebuilt your credit rating, you've still got all the money from your inheritance, you can still put down a deposit and you'll have none of this hassle about the mortgage.

And you're still only 28.

Janecc Tue 10-May-16 17:20:51

It was smile. Do what you can to up your credit rating - even if you do silly things like have an account in your name where DH puts money in and you spend it Be the payer of utilities - anything you can think where your profile can increase and you need transactions for that. These may not be the best ideas but ask around how to up your credit score. If you get a mortgage I would consider doing it for a short length of time and hopefully in a couple of years your score will have improved and you will be able to get better rates.

Janecc Tue 10-May-16 17:24:54

Agree luna as long as house prices don't rise drastically, which is why I suggested btl property. Everything is a gamble.

HeyMacWey Tue 10-May-16 17:25:00

Can you not apply for a joint mortgage but as you are not working you just put down that your income is zero as house wife.

However as you're being turned down for mortgages this is surely going to go on both of your credit histories which isn't going to help.

I agree with Luna - see a good ifa and get a 5 year plan sorted.

Majorlyscared1993 Tue 10-May-16 18:10:37

Thank you for more replies!

We haven't been rejected as such... No marks on credit file as it never got anywhere so that's ok. for us it is now or never (probably sounds stupid and wasteful

Majorlyscared1993 Tue 10-May-16 18:11:23

Sorry half a post!

But if we carry on renting where we are, any money we have is going to go fast. And we have another child on the way. Such a mess. Arghh.

kath6144 Wed 11-May-16 12:56:16

Op - why is it a now or never scenario? I think the advise from others, to put the money away whilst you sort out your credit history (I think it is 7yrs that bad debts drop off) is wise. You can then buy it in joint names.

DS has recently inherited a large sum, but being just 18 is not in a position to buy a property yet, and decided against BTL, so he is splitting it between his stocks and shares ISA, drip fed monthly, and some high-interest 2/3 year bonds paying up to 2%.

If you lock it away, it will still be there for you to buy a house in 3 years, or whenever you have sorted out your credit history.

We have also spoken to DS about building up his credit history, (he already has his mobile in his name) as he will probably buy a house earlier than expected, due to inheritence, so needs to make sure he can get a mortgage at that time.

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