being given money for house purchase - laundering question

[rodneydel]

I am in a fixed rate mortgage and looking to port my mortgage to a new home.

My boyf/oh and I want to live together but he has an iffy credit record and I don't want to pay the hefty fee to close the mortgage.

The plan is that I'll port and use my equity made and he will give me the remaining equity needed to make the purchase. This is approx 30k. Is this possible?

I know you have to prove where money came from, which is fine, his is from savings.

I understand he can't go on deeds as he isn't on mortgage and we will have a legal agreement reflecting that, but is what we are proposing actually legally allowed?

Why wouldn't it be allowed?

I dont see why it wouldnt be, but how will he protect his £30k if his name is not on the mortgage or the deeds?

I know no one plans to split up when you go in to a relationship - but say he was to cheat on you, and you did, would you want to give him his money back? will you have a contract about what happens? Also, what will he be contributing to the house? are you getting married? do you have DC?

i think you need to get good old fashioned legal advice (sorry if thats not a help)

I suppose it's whether mortgage companies will accept money from him as equity, as I know they can be funny and if family give money they need something that says its gifted.

We would sort legal documentation via a solicitor.

He will be paying me rent. I am putting £50k more in to the house than him, so I want to protect my equity too.

We each are single parents and are due to have a baby in January.

My understanding is that he'd have to declare the £30k as a gift which would directly contradict any other legal agreement you wanted to make.

I also think there are some lenders who wouldn't be happy that the person making the gift will be living in the house- it's ok if the gifter is nothing to do with the property but a potential problem in this situation.

A good broker will be best placed to guide you.

Just to add, it's not money laundering that is the issue here, although it is why the source of a deposit gets checked, it's the potential for a third party having a claim over the property.

My parent gave me the money to buy my flat outright instead of getting a mortgage, I pay them back £50 a week.

However what we have in place is a Declaration of Trust (your OH could do this to protect his money) which is on the Deeds this means that whilst my Name is solely on the Deeds for ownership purposes I canto sell my flat without them knowing and the the bank account I pay into will be checked...anything I haven't paid back will go back to them with the sale.

It's totally different if there's no mortgage involved princess. This is about lenders not wanting anyone else to have a claim on a property.

You need a solicitor - you can buy unequal shares of the property. For example:

He is putting in £30k equity, you are putting in £80k equity and there is £50k mortgage.
You own 8/11ths and he owns 3/11ths. He can 'buy' a greater share if he pays more of the mortgage than 3/11ths. This can all be done with a solicitor's agreement and should not be a problem to a mortgage company. You will both be on the mortgage

I think the boyfriends credit history is the problem though carol, it sounds like OP thinks him being on the mortgage isn't an option because of this.

We did this on our first house together before we married as although I had equity from my house £100k I had no income (student), I can't remember exactly what the legal agreement was but our solicitor sorted it out and it was fine with the mortgage, we also took out a life insurance policy to cover dH with regards to the mortgage / inheritance taxes and sorted out wills so we were covered if the worst happened. It was a bit of a faff but better than worrying about it going wrong.

When you fill out the forms initially for the solicitor/conveyancer there is a question in there if any of the money is a gift or loan. I am not an expert, but I think the mortgage company may look at this closely - I guess that it might depend on what percentage of the property the 30K covers. Basically if anything goes wrong the mortgage company will want the property to sell at a price that will cover the outgoing loan and the 30K if that is down as a loan.

I would have an informal discussion with the solicitor about the rent payment bit, as I'm not sure how the mortgage company would see that so sort the details out before you mention it.

'tenants in common' can own different percentages of the house without it being a straight 50/50 split but that doesn't help you port your mortgage. I'd look into it though.

I am a mortgage adviser for one lender only so cant speak for them all but can see several problems for what you are proposing.
Remember that lender is looking for a credible fully disclosed proposal that cant come back to bite it in the ass later, either in a forced sale situation or if you decide to claim for misselling or bad advice.

Here they will need to make sure the interests of all resident adults are captured.
Yes your partner can sign a declaration of gift which waives all his rights to the 30k. However as a resident he will have an implied interest in the property and could make eviction in a forced sale difficult. Some lenders will allow a deed of consent and postponement to be signed where he waives his rights to the property in favour of the lender. Basically leaving him with few rights.

Some lenders will dig deeper wanting to know why he is not being added as a party to the mortgage...and they will strongly suspect why. Some will insist that he is made a party to the mortgage and deeds.

The rental money you mention can also be issue. If you are relying on this to support payments to the new mortgage they may insist on a buy to let type mortgage with higher rates -messing up that ported loan you are trying to hang onto to avoid a big early repayment fee. Also if you are relying on his "rent" again they may just say no he is not paying rent as he is your partner ,but is in fact contributing to the mortgage and upkeep of the property and must be party to the loan.