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Original poster

Parent taking out a loan and giving it to us as a gifted deposit - Mortgage

32 replies

Cj88 · 18/03/2019 19:30

Hi all. Going through steps of buying a property with my wife and currently reached standstill with the mortgage broker. Been clear from the outset that deposit was going to be gifted to us from my mum. Basically my mums gifted deposit is based on 6k cash and £12k personal loan she has taken out. She has signed form saying it is a gift, does not expect it back, has no rights over the money or the property we are purchasing As we were getting to the nitty gritty with regards to final mortgage application the broker has said that we need to stop proceeding as lenders will not approve the mortgage as when traced it is coming from a loan not cash. My argument was that the cash is that a gifted loan and we and the property have nothing to do with this. The loan agreement is between my mother and the bank which she will be paying and not us. Any one had the same issue? Gone through this? Any advise is welcome as at our witts end and potentially about to lose out on our house. Thanks

OP posts:
mousehole · 18/03/2019 19:39

This reply has been withdrawn

withdrawn at poster's request

nervousnelly22 · 18/03/2019 19:43

My mum did exactly this to top up my loan. She wrote a letter and it was no problem. She said that she wasn't expecting a share/any payment.

In reality once I got the mortgage I paid her the money monthly Grin

LoubyLou1234 · 18/03/2019 19:43

My partners dad gave us money towards our deposit and our solicitors asked for bank statements from him from the account the money came from. (money laundering regulations)

He also wrote the gifted deposit letter. The bank were happy with just the letter, however I'd be surprised if solicitors/conveyors didn't ask for more....

LoubyLou1234 · 18/03/2019 19:47

It's not just as easy as it being in your bank account the solicitors want to be able to trace where the money came from for regulations. I felt awful asking him for statements it's so intrusive. Or total deposit was half the house price, we also had to provide statements of where our share had come from too.

Original poster
Cj88 · 18/03/2019 19:49

Hi NervousNelly, who was your mortgage supplier? Thanks

OP posts:
Original poster
Cj88 · 18/03/2019 20:07

Hi LoubyLou, that seems to be the issue according to the The broker. He is saying when it is traced, it will be visible and that lenders will not approve a mortgage based on the fact the deposit was raised through a personal loan, even though said loan is not payable by us, is not in our name and no agreement to pay attached to me or my wife

OP posts:
strathmore · 18/03/2019 20:56

Why on earth would you let a parent get into debt in this way?

Sounds very selfish and irresponsible. What happens if she loses her job? Gets ill and cant work? Needs to get a loan for something that she needs?

Take out your own loan or if you can't do that save up until you can afford to buy.

Original poster
Cj88 · 18/03/2019 21:12

Round of applause for you Strathmore, well done!

OP posts:
strathmore · 18/03/2019 21:21

Round of applause for you Strathmore, well done!

For what? Pointing out that a single person (you only mention a mum) who seemingly only has £6k in savings (or why would she need to borrow more) is not only being asked to give it to you but also to take out an additional loan?

The bank sound like they are protecting her from a very vulnerable position. There is a big difference from gifting a deposit from plentiful savings as opposed to making yourself very financially vulnerable by taking out a loan.

What happens if she defaults on the loan? Would her own home be at risk?

Original poster
Cj88 · 18/03/2019 22:07

Strathmore, I was going to type out a long reply, but it’s just not worth my time. The full facts are not out there, and I don’t have to justify anything to you. You haven’t been in this situation and you can’t offer any advise, which was the main objective and responses from people I was looking for. On that note thank you and goodbye. By the way my mum and dad are happily married.... Thanks for asking.

OP posts:
Cloudtree · 18/03/2019 22:10

you don't get to say "thank you and goodbye" to people on the thread. Its an open forum. plenty of people will think you ought not to be letting your mum get into debt so that you can buy a house.

AlexaShutUp · 18/03/2019 22:11

I know it's not what you are asking, OP, but also find it strange that you'd let your mum get into debt for your deposit.

Stuckforthefourthtime · 18/03/2019 22:16

Strathmore makes a totally valid point. It may not apply to you personally, but surely you can see that on the facts you've shared on this forum, it looks like an older lady is about to take out a loan that is 200% of her (low) savings, to help her child (with no deposit) buy a house (in the midst of a lot of uncertainty about Brexit and the economy). The risk could be very high.

DharmaInitiativeLady · 18/03/2019 22:18

Appalling on your part to accept this from your mother

titchy · 18/03/2019 22:21

Sounds like your broker's done you your mother a favour....

Colette · 18/03/2019 22:24

Repayments on £12000 are quite a financial commitment ,even over a longer period .... Not unreasonable for bank to see this as a risk factor.I have worked in mortgage underwriting when lending criteria was less stringent and it would not have been ok then.

miranda1511 · 18/03/2019 22:27

How do you know the position of the mother. She might have lots of equity in her home and access to a low interest loan coupled with a desire to help her offspring. Judgy much!

UnderHerEye · 18/03/2019 22:29

That’s a very snappish response to the quite reasonable point made earlier - not Male are you by any chance OP?

Original poster
Cj88 · 18/03/2019 22:30

Unfortunately the broker has found the best 3 deals for our situation do not accept gifted deposits where the money has come from a non UK account. Unfortunately as my parents only spend 3 months in the country a year their money is in a European bank account. The “small” amount of money which she has in her UK bank account is for the time she is in the country this year. I’m not forcing her into debt, I’m not taking all of her money to leave her penniless. I’m not asking My parents to get into debt for my deposit but as it stands a transfer from an EU account isn’t going to satisfy my 3 potential lenders due to money laundering checks. That is a whole other thread but that is where we are. My parents have offered to do this for us and they do not and have not been pressured into this.

OP posts:
Fere · 18/03/2019 22:30

Maybe OP's mum, that "older lady", is 45 and earns good wages?? What is the problem with posters on this thread assuming mother has to be elderly and vulnerable????

Colette · 18/03/2019 22:31

Maybe , loans still not accepted as a deposit

blue25 · 18/03/2019 22:37

That's not a healthy situation to be in. Parents should not be taking out bank loans for their child's mortgage deposit.

Wait, save and get your own deposit together. Your poor mum doesn't need that loan hanging around her neck.

yearinyearout · 18/03/2019 22:37

Yeah, I'll join in that chorus too. Makes no financial sense for your mother to be taking out a large personal loan for your house deposit.

HeyCarrieAnneWhatsYourGame · 18/03/2019 22:38

We brought with Nationwide in 2017 and the gifted deposit letter and a screenshot of the online banking with my parents name was enough- and we thought that was OTT. Wanting statements seems bananas. My parents also took part out as a personal loan as the (low) interest was less than they would have lost in taking it from the trust it was in with less than 12 months notice. OP and their parent sounds like they have a similar legit reason for doing a similar thing, I can’t believe the amount of people piling on to accus them of making some frail old lady destitute.

Original poster
Cj88 · 18/03/2019 22:48

HeyCarrieAnneWhatsYourGame / Fere / Miranda1511, Thank You.

OP posts: