First time buyer/inheritance deposit

JT1994 · 2021-04-04T19:23:57+00:00

I’ve just had an offer accepted on my first house! Buying as a single person currently living with parents, I have a mortgage advisor ready and a large deposit - however, the deposit is from inheritance which is taking a while to get to us, told it should be July when we get the money. Have proof of it but just worried the time will come when I have to pay the deposit and it’s not there yet.. Obviously I’m chain free but the seller hasn’t bought a house yet so I’m thinking it might be quite a while before completion, and have been told that there are some delays at the moment anyway due to covid, is that right? To be honest I wasn’t expecting to buy yet but started looking and found this place which is ideal, with so little around at the moment I couldn’t let it go! Also just wondering what else could go wrong... I so want to get excited about the house but nervous that it will fall through..

SausagePourHomme · 04/04/2021 20:26

Your mortgage advisor should be able to explain how this works

hellcatspangle · 04/04/2021 20:33

You won't need to actually pay the deposit until you exchange contracts, but I'm not sure how seriously they'll take your offer if you don't have the funds in place. Presumably there could be a hold up getting the inheritance?

hellcatspangle · 04/04/2021 20:34

I'm surprised they've accepted your offer when you don't have the money in place yet.

purpleme12 · 04/04/2021 20:38

I guess if all parties are happy with July and you can prove it will come then it might be ok
But it's quite risky if you don't have it yet

Original poster

JT1994 · 04/04/2021 20:40

@hellcatspangle

You won't need to actually pay the deposit until you exchange contracts, but I'm not sure how seriously they'll take your offer if you don't have the funds in place. Presumably there could be a hold up getting the inheritance?

Mortgage advisor didn’t seem to think it was a problem, just said a letter from my parents stating they would be gifting me the money would be fine.

OP posts:

Ohpulltheotherone · 04/04/2021 20:45

Well in theory it’s fine if your parents will sign the letter to confirm it’s a gift - but they may also have to provide proof of funds. So assuming your parents have the equivalent amount in liquid assets they can demonstrate then it shouldn’t be an issue in the short term....

Mortgage lenders usually ask for proof of funds for money laundering purposes and so do solicitors.

If you’re expecting funds around July then you will need to tell your solicitor you are not looking to exchange until then, they will ask you if there is any date to work towards. Best be on the safe side and tell them or they will just press on with the sale.

BrieAndChilli · 04/04/2021 20:48

July is quite a way alway and you would be looking at exchanging probably before then.

We had the same - deposit was coming from inheritance that MIL was then gifting to us.
Was supposed to be having the funds released middle of Jan, we were due to exchange end of Jan, anyway there was a hold up with release of the funds, a meeting had to be set up which nobody had told MIL and aunt and so that was another 2 week delay plus then a further couple of weeks for actual release of the money! Luckily SIL had money in saving from a different inheritance that she lent us as a bridging loan.

Original poster

JT1994 · 04/04/2021 20:50

@BrieAndChilli

July is quite a way alway and you would be looking at exchanging probably before then.

We had the same - deposit was coming from inheritance that MIL was then gifting to us.
Was supposed to be having the funds released middle of Jan, we were due to exchange end of Jan, anyway there was a hold up with release of the funds, a meeting had to be set up which nobody had told MIL and aunt and so that was another 2 week delay plus then a further couple of weeks for actual release of the money! Luckily SIL had money in saving from a different inheritance that she lent us as a bridging loan.

My parents are planning to take a loan out on their house if the worst comes to worse and I need to pay the deposit before the inheritance comes through - is this a viable possibility and can I tell the estate agent that this is the plan?

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Daisydoesnt · 04/04/2021 21:02

OP I think you need to be really honest and up front (unless you have already explained this to the EA and the vendor): the deposit is a gift from your parents, and they don’t have the cash yet as they are waiting for it to be released. Is that right?

I honestly think you would be better waiting until you actually have the money in your account; this could get very stressful and I wouldn’t be surprised if your vendors don’t go ahead with you as you aren’t really proceedable. Sorry to say that.

Buying is incredibly stressful and I think you are setting yourself up for potential heartbreak and expense (eg if you start paying our on searches/ conveyancing etc for it only to fall through because something goes wrong with your deposit).

Original poster

JT1994 · 04/04/2021 21:07

@Daisydoesnt

OP I think you need to be really honest and up front (unless you have already explained this to the EA and the vendor): the deposit is a gift from your parents, and they don’t have the cash yet as they are waiting for it to be released. Is that right?

I honestly think you would be better waiting until you actually have the money in your account; this could get very stressful and I wouldn’t be surprised if your vendors don’t go ahead with you as you aren’t really proceedable. Sorry to say that.

Buying is incredibly stressful and I think you are setting yourself up for potential heartbreak and expense (eg if you start paying our on searches/ conveyancing etc for it only to fall through because something goes wrong with your deposit).

Thanks, I get that and is why I’m worrying but my mortgage advisor was confident, as was my brothers who is in the same situation. Would they have any interest in making us believe something that wasn’t correct?

OP posts:

Original poster

JT1994 · 04/04/2021 21:15

@BrieAndChilli

July is quite a way alway and you would be looking at exchanging probably before then.

We had the same - deposit was coming from inheritance that MIL was then gifting to us.
Was supposed to be having the funds released middle of Jan, we were due to exchange end of Jan, anyway there was a hold up with release of the funds, a meeting had to be set up which nobody had told MIL and aunt and so that was another 2 week delay plus then a further couple of weeks for actual release of the money! Luckily SIL had money in saving from a different inheritance that she lent us as a bridging loan.

Were the estate agents/sellers happy with this?

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Onjnmoeiejducwoapy · 04/04/2021 21:19

There’s no issue with this as long as you are upfront about timelines.

Changingwiththetimes · 04/04/2021 21:36

Do the vendors know of the timeline? Are they happy to wait until July (or longer) to.exchange? It doesn't matter what the broker or your brother thinks, it's up to the vendor to decide whether this is acceptable.

Original poster

JT1994 · 04/04/2021 21:46

@Changingwiththetimes

Do the vendors know of the timeline? Are they happy to wait until July (or longer) to.exchange? It doesn't matter what the broker or your brother thinks, it's up to the vendor to decide whether this is acceptable.

It won’t necessarily be July - if the deposit needs to be paid before then, my parents will borrow the amount against their house (they’ve paid their mortgage off) to fund the deposit, then pay it off when the inheritance comes through. So the deposit will be paid when it needs to be. Again the seller hasn’t found a property yet and it’s a very competitive market down here at the moment so they may need some time too. Will be upfront when discussing with estate agent on Tuesday - offer only accepted on Friday and then Easter weekend so not been able to do much since!

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RainingBatsAndFrogs · 05/04/2021 09:10

If the vendors haven’t yet found a place, a buyer like you could take the pressure off, rather than someone who wants to exchange ASAP.

So phrase it to the EA as “I am expecting to be able to exchange bo later than July, so no pressure on the vendors, but can bring this forward if they find they can move faster” .

Be aware that your vendors may have their eye on the stamp duty half way house and want to complete before the end of September. As a FTB this won’t affect you but it will affect them.

SlidesAndLadders · 05/04/2021 09:15

Your parents taking a loan to get the money doesn't work any more than you taking a loan to get the money - your solicitors will need to see the paper trail and it's not often acceptable to the lender that funds are borrowed.

PresentingPercy · 05/04/2021 09:40

It’s probably fairer if the vendors keep the property on the market but keep in touch with you.

My DD was gifted money by me in February but agreed to buy a flat in January when I didn’t yet have the money from a house sale. My DH and I would have gifted her money from our savings if the deposit had been needed earlier. It wouldn’t have been borrowed as that would mean 100% borrowing for the property. In the event, it wasn’t needed prior to the house sale.

So you just need to keep in touch with the vendor. If they find someone who can proceed, then that’s good for them and less good for you. I think you will find a date isn’t firm for inheritance and estate settlement so I’m surprised they are guessing at July - 3-4 months away. I think 1 month away is an accurate prediction - longer than that is guessing the future.

Asgoodasarest · 05/04/2021 09:57

I think you may well be ok. As long as everyone knows the timings and agree them, then it should be fine. If your sellers haven’t found a house yet, then you could end up in a bigger chain anyway. My house purchase took over 5 months and there was only three of us!

On the flip side if this does fall through then don’t despair. I remember seeing ideal houses before we had sold and being gutted they were gone. But something else always comes along eventually. Good luck!