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Deposit for buying parents house

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  • 26-07-2014 9:55pm
    #1
    paddylonglegs
    Registered Users Posts: 3,522 ✭✭✭


    Hi.

    We have been saving to show the banks our saving ability which is fine.

    We need €44k for an 80% mortgage but have had to use some of the money to lend to another family member. The money won't be paid back until after we can draw down the mortgage to buy parents house.

    My parents have expressed that they will not need the 44k paid to them on exchange of the contracts however I'm wondering do the banks need to see the 44k in our account before we are drawing down?

    We have sold our own house with some profit


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    #2
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,878 Mod ✭✭✭✭L1011


    The bank will absolutely require seeing it plus enough to cover legal fees and stamp duty. Touching the savings in any way, even lending to be repaid, will go against you too.


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    #3
    paddylonglegs
    Registered Users Posts: 3,522 ✭✭✭paddylonglegs


    MYOB wrote: »
    The bank will absolutely require seeing it plus enough to cover legal fees and stamp duty. Touching the savings in any way, even lending to be repaid, will go against you too.

    Hi. Thanks for the reply. The money lent will actually be from the profit of the sale of the house. The savings are seperate and will not be touched, however the savings do not add up to 44k


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    #4
    Little Miss Cutie
    Registered Users Posts: 1,194 ✭✭✭Little Miss Cutie


    paddylonglegs wrote: »
    Hi. Thanks for the reply. The money lent will actually be from the profit of the sale of the house. The savings are seperate and will not be touched, however the savings do not add up to 44k

    When we were approved recently the bank wanted proof of sufficient funding and also a surplus to cover legal fees, stamp duty etc


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    #5
    Eldarion
    Registered Users Posts: 484 ✭✭Eldarion


    paddylonglegs wrote: »
    Hi. Thanks for the reply. The money lent will actually be from the profit of the sale of the house. The savings are seperate and will not be touched, however the savings do not add up to 44k

    In this situation the bank is going to want to see at least 50k+ liquid for solicitor fees, stamp duty, surveys etc.

    Is there a reason why the deposit has to be 20%? Most banks will mortgage out with 10% or even 8% deposit.


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    #6
    paddylonglegs
    Registered Users Posts: 3,522 ✭✭✭paddylonglegs


    Eldarion wrote: »
    In this situation the bank is going to want to see at least 50k+ liquid for solicitor fees, stamp duty, surveys etc.

    Is there a reason why the deposit has to be 20%? Most banks will mortgage out with 10% or even 8% deposit.

    We're hoping to get a lower interest rate based on this and keep our repayments lower. Can a lump sum gift from a parent work in this situation? We will be able to show the banks our ability to save and repay, however we just won't have enough until we get the amount back that we lent to another family member. Bit of a catch 22 situation


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    #7
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,878 Mod ✭✭✭✭L1011


    A non repayable gift is normally OK once you still have a substantial deposit to begin with. But you'll need it up front, not after.


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    #8
    GavMan
    Registered Users Posts: 1,914 ✭✭✭GavMan


    The bank will need a letter signed by your folks to say its not a repayable loan and that they'll have no interest in the house.

    We did it. Very common and not an issue...


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    #9
    The_Morrigan
    Moderators Posts: 9,368 ✭✭✭The_Morrigan


    I must say I'm ever so slightly confused by this situation, so please forgive my stupid questions while I try get my head around this.

    You've agreed to purchase your parents house.
    You had 44K saved as a deposit but gave some of that money to a relative as a loan.
    This money won't be paid back before the contracts are signed.

    So stupid question time......
    Why can you not delay the purchase until after the monies are repaid?
    Why can you not amend the purchase price so that you don't need the full 44K?


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    #10
    Marcin_diy
    Registered Users Posts: 464 ✭✭Marcin_diy


    paddylonglegs wrote: »
    We're hoping to get a lower interest rate based on this and keep our repayments lower. Can a lump sum gift from a parent work in this situation? We will be able to show the banks our ability to save and repay, however we just won't have enough until we get the amount back that we lent to another family member. Bit of a catch 22 situation
    If I understand correctly you are going to buy a house from your parents - any chance they could put lower selling price for the property - You will have to pay less money in interests as you will need lower mortgage and pay rest of agreed amount directly to your parents in monthly installments?

    answering your question - yes
    I bought a house few years ago in Dublin and my parents who live abroad topped up my savings and followed this with a letter stating that those money are a gift and they won't be seeking refund.


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    #11
    Ms2011
    Registered Users Posts: 3,120 ✭✭✭Ms2011


    GavMan wrote: »
    The bank will need a letter signed by your folks to say its not a repayable loan and that they'll have no interest in the house.

    We did it. Very common and not an issue...

    Yep, did the same too & had no issue


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