If you lent money for a mortgage deposit...

[Dingo33]

How did you agree repayment?

We are considering lending an amount to a family member. If you have done this I'm interested how repayment works? Did you just wait until the house was sold and then get back your share of the deposit plus whatever % the property has increased in value (adjusting for any capital payments eg extensions the owners have made I'd assume)? Or was there a set repayment schedule?

I think in that case the better option is joint mortgage.

Perhaps something can be drawn up that states you're responsible for the deposit and them the repayments.

Obviously though there's a risk with that should they default on the payments.

And if you own part of the property and also own your own home you get stuck paying extra stamp duty too.

If you "gift"but it is really a loan then that is mortgage fraud. You also need to consider what happens if you or the recipient dies, gets divorced, goes bankrupt or loses capacity. What is your recourse in any of those situations ? On your death for example your executors would generally recall the loan for immediate payment as an asset of the estate. Has the recipient considered life insurance to repay you in the event they die before the loan us repaid ? I draw up loan agreements for families as part of my work ( lawyer) and 9 out of 10 change their minds and decide not to proceed once we start discussing the above.

If you are intending to take a stake in the property then you also need to consider the tax implications. SDLT on purchase ( higher rate applies as already mentioned elsewhere on thread) capital gains tax on sale and inheritance tax on death.

Banks generally don't allow this as its another call on your income to service.
Also, the bank will always have first charge on the property.

Same, but we agreed an amount to pay back monthly and that's what we do, never missed a payment and never would.

If I could afford it and it was my child/sibling then I would just gift them the money.

I would hope that they would offer to pay me back but I’d be prepared if they didn’t fully pay me back.

If you give it as a gift, then there are no problems or falling out in the future.

Mortgagors don't usually allow any form of loaned deposit these days rather they need to be gifted. For those that gift (but really loan) to kids if they end up divorced it will be treated as a gift and the spouse will be entitled to it being an asset of the marriage as otherwise the child would need to admit to the court that they and you had intended to defraud the mortgage company.

My now in laws lent us the money for our deposit on our 1st house, half was a gift to my now DH and the rest was to be repaid, but a condition was added to our deeds that if we split up that my DH would get the gift out before I was entitled to anything else, I repair the loan element in monthly payments with additional as ‘interest’ they didn’t ask for the extra but we thought we should, although they were very flexible so if i missed a month they didn’t mind

when we moved post marriage it was agreed all round that as I had repaid the loan element the clause was removed

I would reccommend you forget that thought because mixing money with family never ends well

Generally when the solicitors check where the deposit is from the person who has gifted the money has to sign saying it’s a gift and they don’t want it back

but truly just don’t get involved

either give it as a gift or not at all

money and family is the quickest way to fall out with family

You need to sign a letter to say it's a gift otherwise you would have a claim on the house and the mortgage provider will not like that.

If you say the amount is a loan officially again the mortgage company might not lend them the full funds as it's on the basis that they have a specific deposit amount.

My dad lent me a sum of money he declared it as a gift and I informally paid it all back.

We had parental help (16 years ago now so different mortgage and gift rules) for a deposit to buy our first home. We agreed to pay back when we remortgaged after 2 years. We had an agreement of some sort drawn up with their solicitor.

Dad lent us £10k. As far as the mtg company are concerned it was a gift otherwise it got bloody complicated.

We pay him back monthly.