AIBU to consider borrowing a house deposit from a friend temporarily?

They always fraud check where your deposit comes from. My parents gifted my brother a similar amount and not only did he have to show the transfer and give their info and identities, they had to supply personal info about where that money originally came from - it's part of anti money laundering checks. So your friend would have to say its a gift, legally cover that in documentation and share where the money was originally earned with your solicitor. Maybe she is up for that. However, I imagine when it was raised she was thinking it'd just be a case of popping the money over and job done. It was a real pita for my elderly parents and very frustrating as it came from a variety of sources and each needed verifying.

Estate agent here. As long as you’ve got a broker or lender who has confirmed you can definitely re-mortgage and can confirm this to the agent selling, that would be enough to get an offer accepted and you start the legal work. Currently sales are taking 2/3 months at least to go through, so you’d get your re-mortgaged funds before exchange. Happens regularly. I don’t understand the urgency to have the deposit immediately.

We don’t need to imagine, half of London is owned by them as a living example 🤣

It’s money laundering 101. In your case it (presumably) isn’t a way for your friend to launder money; but I’m sure you can imagine the issue if property buyers were allowed to be “gifted” large sums of money by “friends” without any interrogation of where that money had come from, with the intention to hand “clean” money back to them afterwards from a traceable source?

How is bonkers....

Honestly I don't know how some people get on in life if you think it's bonkers a bank would question where and why £200k just landed in your account.

Are you going to say it is a gift even though you intend to pay it back? If it is a loan it will reduce the amount you can borrow on the mortgage because it's another debt. If it has to look like a gift I think you would need something in writing to prove it is a gift, would your friend do that? Or perhaps you could phrase it as a bridging loan against your other property, but I think that would need the agreement of the mortgage company on that house.

My parents did this for more brother - it’s a bridging loan, totally normal

We did this and borrowed money from my SIL. We had to get an agreement in writing drawn up by a solicitor to say where the money was coming from and it had to be signed and witnessed by each side. We also had to say what would happen in the event of any of us dying before the money was paid back in case of potential inheritance tax obligations etc. The only thing that may be a problem is that my SIL had to answer questions and provide bank statements going back 12 months to show where she had got the money from and we obviously got to see these - she did also find some of the process quite intrusive, when we had to keep going back to her with constant questions and paperwork. Your friend may not want the hassle, or for you to see the entirety of their finances, so make them aware of that before you accept the offer. It’s not just a case of them handing it over and forgetting about it until you give it back.

I was thinking this too

The mortgage company are legally bound to do a Money Laundering check. You’ll need to show (or your friend will) where the funds have come from, whether it is legitimate funds etc.
but as long as that’s legit, can’t see a problem.

Conveyancer here - I haven’t RTFT as on a very brief lunch break. You will have issues with a mortgage lender, but your friend must also be made aware that if it is a loan she will need separate legal representation and a loan agreement drawn up. Or, she can declare as a gift and will not need separate legal representation. However for both scenarios she will need to be ‘AML checked’ which will involve providing documentation to prove her source of wealth and lots of documentation to prove her source of funds, together with ID docs. It is a very intrusive process, which she may not be aware of and may not be happy to do.

They just need to know where the money is coming from and she would have to fill in a form and provide details of her bank account.

It shouldn't be an issue - we had to do similar back in 2007 when we needed the equity out of our house for a property we were moving to and our own house sale fell through. We borrowed £100k temporarily from a family friend and our bank just made them sign a gift waiver. We then repaid our friend 3 months later when our house sale went through. It was buttons to our friend and they didn't care if or when we repaid them, but I was keen to sort it asap.

We almost needed to do this with a wealthy friend and we would have just got everything drawn up properly by a solicitor.

Tbh most banks would not touch it with a barge pole. most major lenders have policies that only allow close relatives to “gift”.

Your options would be:

• you declare it as secured loan and your friend places a charge over your property. Most banks won’t like this as it majorly messes with your affordability.
• You declare it as an unsecured loan, your bank will want to see a loan agreement, but again most likely won’t accept it due to affordability.
• you declare it as gift (unfortunately many people will recommend this- this is MORTGAGE FRAUD if you are caught). As I said before most banks won’t accept this as she is not a close relative and again is a major flag for money laundering. You’d need a specialist broker.

That’s what we did with my husband‘s aunt’s money. The solicitor still needed to check the legitimacy of the funds though and my husband‘s aunt had to go through some anti money laundering checks. The different is though that we didn’t need a mortgage at all, the other 50% came from the sale of our property. We are paying the aunt back monthly now.

I believe that your lawyer needs to advise you. I was gifting money to my DD as her deposit. I had to sign some paperwork confirming where it came from .

You need to get proper financial and legal advice not mumsnet! There will be implications and you would need a contract drawn up to say how and when you will pay her back! Then there’s the issue of money laundering which obviously this is not, however financial institutions may see it differently!

When our son was looking fora house we gave him half the deposit (not anywhere like 200k, was under 10,000.
We had to sign a form stating that we would not try to recoup our money so ut was basically a gift.
I assume that its to do with if we demanded our money back and he had to sell, or if sonething went wrong and he defaulted on the payments, the property would be property of the bank and we would have no right to claim back our 'gift'.
Definitely get it checked by a solicitor and ensure an airtight agreement is done.

This! I borrowed a similar amount for an extension - remortgaged and had the money in my current account in days.

It’s entirely up to you of course whether it’s worth the risk - after all only you know what the friendship is worth.

Who told you this?
If you had bothered to contact your bank today who you have your mortgage approval with... your solicitor would have had the funds by Monday.

I was in a similar situation however instead of a loan I put the friend as a tenant in common - owning a % of the property equal to the amount they give/ cost of property. Whenever your other property sells you can ‘buy her out’ - I don’t know if you’d have to pay stamp duty on her part too though, you’d need to check.
the tenancy in common was signed with a lawyer and each of us had our own lawyer.

No, you don’t have the funds. Having the funds means having cash accessible at a couple of day’s notice.