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

[Cj88]

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

What you've been told about transfers from EU accounts doesn't sound right to me. I moved from the UK to another EU country and transferred money from UK accounts as part of the deposit. They simply needed to be able to do the same money laundering checks by looking at bank statements in that account.

If you can show statements from your mothers EU accounts that show her money comes from working/investments/basically any reputable source other than drugs or terrorism you'll be fine.

The problem with the loan is in 99% of cases no matter what letter is written that loan is actually repaid by the homeowner. Given the situation you describe I'd be looking at ways to skip the loan component as it's too messy.

I recently changed roles from broking mortgages. Most lenders I used (whole of market) were able to use monies transferred from an EU account, but the lender would insist on seeing the bank statement for the account it was sent from in EU, and then the UK one it went into, and from there to you. E.g Sparkasse to NatWest (Mums account) to NatWest (Your account). Most lenders will not accept someone borrowing on a personal loan level to use for a deposit, whether that is you or a family member gifting it. This is because lenders are very nervous about what happened to Northern Rock still.

As @HeyCarrieAnneWhatsYourGame said, we also bought in 2018 and were easily approved by nationwide with a signed gift declaration, no questions asked at all about the origin of the money and my dad borrowed the money while waiting for an inheritance, transferred it to me and I paid it to the solicitor from my account, no questions asked!

I can't believe that people are automatically assuming financial abuse ! If mum has capacity to take out a loan that's her choice surely?
Ours was similar, very fortunate that mum has assets and wanted to help. They were invested/ not liquid and she has a great credit score so took a very low interest small loan of 10K. Made a huge difference to what I could buy on top of my own savings and pushed me into a lower interest bracket.

I've actually repaid the money/loan now for her after 4 years leaving all her assets intact. The alternative was that down the line j got 10K less than my brother when that time comes. My mother was never ever at risk.

Hi all, just to let you know all went through well and we are now paying my mother back monthly. Thanks again

Just done the same for my daughter re deposit, but from savings and not a loan. The solicitors and mortgage company asked for her bank statement showing the money going in and also last six months of my statement, together with source of my funds. TBH I think the rules are more to do with money laundering checks, so can’t understand why it matters to the bank where the funds come from as long as there is a disclaimer saying the funds are gifted with no expectations of getting the money back. Without looking into your mother’s financial situation how can they assume a loan is putting her into financial difficulties?

Ah, my post crossed. Congratulations op, and good luck with the rest of the house purchase process.