to ask a MORTGAGE question (re loaned deposit!)

When I was a mortgage underwriter for one of the big lenders a deposit from a loan was a straight up no. No negotiation or solicitors letters would change that. If you wanted the money your dad would need to declare it as a gift. I have friends who have done this and then paid it back unofficially. Which is obviously risky for the person gifting the money so depends on how much trust is in the relationship.

You would have an uphill battle trying to find a lender who would accept a loan as their deposit, particularly if the suggestion is that your father would have some sort of interest in the property. If his loan was secured it’d need to be a second ranking charge behind the bank’s security, which would be an utter headache for all concerned (who would have enforcement rights? Would your lender be expected to consult with him if they wanted to take action?) Even if his loan was unsecured, you’d need to demonstrate to the lender that you could service his debt as well as theirs, which will be a challenge - and that’s not even taking into account your fixed term contracts.

On the fixed term contracts more generally, if you use a good broker, you may find there’s a path through if your employer is prepared to provide evidence that you’re highly likely to secure a qualification job with them and your expected permanent salary - my trainee ran into this issue a few months ago when she was buying and our HR team were able to provide this.

Could you do an offset mortgage that allows friends and family to link their savings account to it?
So your dads money is held on a linked savings account in his name, that way the money is still your dads and he could withdraw it when he needs too. But it offsets your mortgage to reduce your interest payments.
I think Yorkshire Bank do one and there are others. Speaking to an independent mortgage advisor might give you some solutions.

I think it would be complex because of capital gains tax.
I know it's a loan not a gift but it is all very complex.

I think you are right to pass on this, as others have said there could be a lot of complications. Have both lent DC money for deposit but declared it as a gift (it was repaid) and genuinely gifted a deposit. From your father’s point of view my advice would be never to lend what you can’t afford to lose. He can’t afford to lose this and if something went wrong with your plans it would be seriously awkward.

Yeah it's a bad idea and unlikely to satisfy a mortgage lender. Your best bet would be your dad giving you a much smaller gifted deposit to go alongside your savings, then buy the cheapest but best property you can, then upgrade when you've more money.

I gifted my DD my part of a inherited house, she got a mortgage to buy out the other beneficiary. My DD had to take out an extra insurance to cover the LA/SC claiming an interest in the house, should I need care. I'm in good health and was 55. I never wanted paying back. The mortgage company wouldn't count my gift as the deposit, but that was covered anyway, in shared equity. It was quite complex. We went through a mortgage advisor/broker. I'd wait.

It's not crazy. A family member has done it. Lots of legal wrangling beforehand to protect everyone and sort out future issues like dying early etc. best thing that's happened for them though.

Realistically I think the risk is too high for your dad as he's depending on the loan being repaid, and lenders don't like a loaned deposit.

You will have good salaries in a few years so I'd just save and wait until then. We were 33/34 when we bought our first property in London and that's pretty average. DH and I always rented in houseshares rather than renting our own flat which meant we had a decent deposit for London when we did buy.

Haha I pretty much just said the same thing!

No, sorry, if it was me there are way too many risks here. What if you can’t get £175k out at the end of the 3 years. I’m not sure how that would work but that is just so much money. Anything could happen with your training contract between now and then, including it ending unexpectedly and you being unemployed. Or what if you split up. Or have a baby. Or your husband can’t get a job. (Can you see I’m a worrier!!) There are also the costs of buying the property to be considered too. I assume your dad might be worrying during the time the money is lent about how he’ll get the money back which isn’t nice for him when he’s entering retirement. If I were you I would try to live frugally and save every penny in the next 3 years to get together your deposit. Could you even do a houseshare etc to drastically increase savings or move out of London for a bit and travel in when needed (wfh permitting etc) (I assume the £800 a month you’re paying him is to cover the rental income he would lose if he bought in cash / interest in a savings account)

• I would think very carefully

We lent one of our DC some money for a house purchase . It was a much smaller amount so would not have had a significant impact if it had not been repaid. We , like other posters , had to sign to say it was a gift not a loan and that we had no stake in the property. The money was repaid and subsequently my DC and their spouse divorced . If the divorce had happened before the repayment I suspect we would have never had half of the money returned to us . I would like very carefully amount taking such a substantial amount as circumstances can change without warning .

Wouldn't personally. Lovely generous idea of your Dads, but could very easily go wrong.

What if he needs the money sooner for some change in circumstance? What if you can't sell the flat or re-mortgage it when the time is up? What if you don't complete your training? What if you fall pregnant? What if what if what if...

And this assumes the mortgage company are OK with it in the first place - many won't unless he signs to say its a gift.

The best laid plans and all that - I would politely decline.

With a documented loan it is highly unlikely you will get a mortgage. Your £70k salary isn't until you qualify so I am assuming your TC one is on around £40k or less so how would you pay a mortgage , £800 per month loan plus all other outgoings.

I would wait until you qualify and are kept on after your TC before committing to a mortgage.

This is really tricky.
What if one of your parents, or both die. Or need to go into a home.
Do you have siblings?
Things could get very complicated.and it could mean you losing your home.

Very difficult situation, we lent our son the money to bridge when he wanted to buy a house but his flat sale fell through. We were advised by the solicitor to word it as a "voluntarily repayable gift" as a loan would - as previously said - affect the mortgage offer. All well until he lost his job and was refused universal credit as they felt that when he returned the "voluntarily repayable gift" he had intentionally deprived himself of the money so wasn't eligible for UC. Luckily he managed to find a new job but it was very stressful!

I wouldn't do this.
Anything could happen in the next few years that could prevent you paying it back and then he wouldn't be able to retire

Most lenders won’t allow it, no. My parents lent us some money but had to sign various forms to say it was a gift. We are actually paying them it back, but legally it was a gift

This is fraught with potential problems for both you and your dad.

If he is relying on that money for retirement I don't think he should lend it to you.

As PP have said a loan from parents isn’t much help - it needs to be a gift to be used as a deposit. I would finish your training contracts and get a permanent qualified role first. At your future salaries you’re likely to have over £100k household income which will put you in a good position to buy, even in London. At that point maybe your dad can give you £10k or so which would be a big help.

I think this idea has bad news all over it. If he's depending on that money to retire comfortably, then he should invest it elsewhere. He actually can't afford to loan it, not really. So don't take it.

Most lenders get very twitchy about loaned deposits and it’s more standard that they ask if it’s a gift and for that to be written into the contracts.

I wouldn’t take out a mortgage on the basis of remortgaging and releasing equity either, we bought 6 years ago with that in mind and with the increase in interest rates we’re now paying more monthly even though we’ve paid 6 years worth of payments, no chance whatsoever that we could afford yo remortgage and take some equity.

I think the only way your dad could help you would be to buy a property outright he then rents to you, but I doubt you’ll get anything for his budget in London sadly.