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Original poster

Any mortgage brokers/legal bods

32 replies

ThisHouseWillBeTheDeathOfMe · 22/11/2023 21:09

Apologies if this is in the wrong place, not sure where to post...

DH and I are looking to buy a house. £600k.

DF has kindly offered to "gift" us £200k.

We have £100k.

Mortgage agreement in principle of £300k.

DF has now got cold feet a little "what if you divorce, sell up etc" and wants to give us the money as a loan - but with no repayments (ish, I'll get to that) so he can have a secondary charge on the property of £200k.

Realistically, he's never going to ask for the money back. Sort of like an early inheritance. But due to issues in DH and I early relationship, DF wants to know should we divorce, he gets the money back, and can ensure it stays with me and DC, not losing half of it to DH.

He intends to word similar to "A loan of £200k which only becomes repayable on sale of the property, or on divorce of the buyers."

So there will actually be no repayments. And if the house gets sold for whatever reason, he gets repaid, secondary after the mortgage company is repaid.

When we applied for the mortgage, and got the agreement in principle, it was on the basis of a gift of £200k. This is now a loan...but with no repayments, but with a secondary charge on the property.

DH believes we will now lose our agreement in principle as it's no longer a gift. DF believes it will make no difference as it doesn't affect our affordability rating (because no repayments) and that the mortgage company gets satisfied in full,. first should the house get sold whether he's gifted us the money, or loaned in this manner.

Can anyone with insider knowledge shed some light? Not "best guesses" please or assumptions. Actual knowledge please. And I do know we can speak to our broker tomorrow, but DF made the comment "if your broker says this is a problem, it shouldn't be, and you need to find another broker" and I'd like to know if he's correct.

OP posts:
RedHelenB · 23/11/2023 05:04

ThisHouseWillBeTheDeathOfMe · 22/11/2023 22:29

It's not a gift!

Is anyone here actually a mortgage broker or property lawyer, as requested in OP?

Show quote history

I think you need to actually make an appointment with one to get a specific answer, if you post on a forum anyone can reply.

Tippexy · 23/11/2023 05:14

RedHelenB · 23/11/2023 05:04

I think you need to actually make an appointment with one to get a specific answer, if you post on a forum anyone can reply.

Show quote history

The entitlement is real 🤣

Twiglets1 · 23/11/2023 05:23

If only there was a way of accessing someone who is definitely a broker …

NoWordForFluffy · 23/11/2023 05:27

Twiglets1 · 23/11/2023 05:23

If only there was a way of accessing someone who is definitely a broker …

Its Showtime Halloween GIF by Death Wish Coffee

Do you say 'mortgage broker' three times and one appears? 🤔

Original poster
ThisHouseWillBeTheDeathOfMe · 23/11/2023 12:20

Tippexy · 23/11/2023 05:14

The entitlement is real 🤣

Show quote history

It's not entitled.

The question was, can anyone who has actual professional knowledge give an accurate answer.

People ignoring that, doesn't make me entitled. Just makes their responses fill up the thread with nothing of substance or help.

OP posts:
Original poster
ThisHouseWillBeTheDeathOfMe · 23/11/2023 12:23

messybutfun · 22/11/2023 22:39

Yes, mortgage broker. If it is a loan, it will need to be declared as such on the application. If it is a gift, it will need a gifted deposit letter.

No bank will lend with a third party charge on the property.

Ring fencing a deposit via trust deed is possible but again, if your circumstances change that would be taken into account in a potential divorce.

Thank you.

I've noticed that once a mortgage is in place, it's then pretty easy to lend further and place a secondary charge.

Will this be viewed differently because we want the charge at inception so to speak? Will they take into account we're not repaying it?

OP posts:
Original poster
ThisHouseWillBeTheDeathOfMe · 23/11/2023 12:45

Pointblank2 · 22/11/2023 22:49

I’m following with interest. Hopefully there will be a way to do this, it must be a very common occurrence that parents want to help their kids on to the ladder but not lose in the case of a subsequent split.
I once worked in a bank and people often borrowed money from other sources once the mortgage was up and running, the bank’s mortgage was always first charge and subsequent lending from elsewhere was second charge. At no point did the first charge bank prevent the subsequent borrowing from elsewhere as they always knew they had first dibs on any sale proceeds in the event of a default. I can’t see that this scenario is any different from the first charge banks point of view other than borrowing at no cost from family won’t affect their ability to pay the mortgage whereas a loan from elsewhere would.

This is DFs opinion.

And it makes absolute rational sense.

But that, unfortunately doesn't mean anything because mortgage companies can literally see someone paying £3k rent a month for ten years, then insist they can't give the same person a mortgage requiring £2k a month because of their affordability criteria. Rational goes out of the picture with mortgage companies it seems.

OP posts:
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