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Receiving Small loan from family before buying

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  • 14-08-2019 1:36pm
    #1
    dave 27
    Registered Users Posts: 1,203 ✭✭✭


    Hi all,

    We are nearly at where we want to be regarding the 10% deposit on a second hand house, we have mortgage approval but just wondering if we got about 5k of a loan from a family member to get us to where we need to be would this be raised by the banks?

    We have mortgage approval so technically the banks shouldnt need to review the accounts but it could differ from every bank. Has anyone come across this before?

    Thanks in advance


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    #2
    purpleisafruit
    Registered Users Posts: 508 ✭✭✭purpleisafruit


    Might be best to have the family member sign off the loan as a gift


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    #3
    dave 27
    Registered Users Posts: 1,203 ✭✭✭dave 27


    purpleisafruit wrote: »
    Might be best to have the family member sign off the loan as a gift

    How does that work? Sorry for sounding stupid here!


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    #4
    Atomic Pineapple
    Registered Users Posts: 18,272 ✭✭✭✭Atomic Pineapple


    Just get them to write and sign a letter stating it is a gift that doesn't have to be paid back.


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    #5
    dave 27
    Registered Users Posts: 1,203 ✭✭✭dave 27


    Atomic Pineapple wrote: »
    Just get them to write and sign a letter stating it is a gift that doesn't have to be paid back.

    How about on the bank transfer if they transferred money into the account?


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    #6
    jellybear
    Registered Users Posts: 3,224 ✭✭✭jellybear


    Bank accounts will be looked at and a transfer for that amount could be queried so best to have a letter, as mentioned above :)


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    #7
    dave 27
    Registered Users Posts: 1,203 ✭✭✭dave 27


    jellybear wrote: »
    Bank accounts will be looked at and a transfer for that amount could be queried so best to have a letter, as mentioned above :)

    Perfect thanks for the help, so have the letter and lodge a cheque instead of using online transfer?


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    #8
    jellybear
    Registered Users Posts: 3,224 ✭✭✭jellybear


    dave 27 wrote: »
    Perfect thanks for the help, so have the letter and lodge a cheque instead of using online transfer?

    I'd say an online transfer is fine once you have the letter when you meet the mortgage advisor in the bank :) Make things as simple as possible for yourself as there will inevitably be hold ups so best to pre-empt them if possible.


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    #9
    SozBbz
    Registered Users Posts: 1,889 ✭✭✭SozBbz


    Is it actually a loan or a gift op?

    For any bank to count it towards your assets, a true loan from family would be the same as any other loan, a liability.

    If its a "loan" in name only that never needs to be paid back... then yes, you should probably start referring to it as a gift and the bank may ask the person who gave the gift to verify in writing that they don't intend to seek any repayments or claim in interest in the property being purchased.

    Not sure of €5k would trigger such a process, its not a huge sum, but just be prepared that they may ask for it.


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    #10
    headtheball14
    Registered Users Posts: 223 ✭✭headtheball14


    You are allowed to gift 3 thousand tax free per year to anyone. Amounts above are relevant to lifetime threshold depending on relationship with gifter.
    If you are a couple or getting a gift from a couple, it would make sense to split it into 2 separate payments . For that amount I don't think it would be queried by bank. If mortgage is approved they shouldn't be checking back in accounts at this stage


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    #11
    dave 27
    Registered Users Posts: 1,203 ✭✭✭dave 27


    jellybear wrote: »
    I'd say an online transfer is fine once you have the letter when you meet the mortgage advisor in the bank :) Make things as simple as possible for yourself as there will inevitably be hold ups so best to pre-empt them if possible.

    Thanks for the help, much appreciated. We have approval so im not sure if we need to go back to the advisor again but its all new to us so you never know!


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    #12
    Star Lord
    Registered Users Posts: 30,123 ✭✭✭✭Star Lord


    If it's just approval in principle, they may take another look at the finances when you have gone sale agreed, and are looking to get the mortgage pack issued.


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    #13
    Phileas Frog
    Closed Accounts Posts: 946 ✭✭✭Phileas Frog


    On top of the 10% you'll also need money for the stamp duty and legal fees before you can get approval. Don't forget that...


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    #14
    jimmycrackcorm
    Registered Users Posts: 14,330 ✭✭✭✭jimmycrackcorm


    dave 27 wrote: »
    Perfect thanks for the help, so have the letter and lodge a cheque instead of using online transfer?

    Doesn't matter how it gets lodged, the bank will query the source and will require a letter confirming no interest in the property by the provider of the money.
    Also that it's a gift and not a loan that affects repayment capacity.


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    #15
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    Tbh they might not even bother asking when it’s only 5k. It wouldn’t be unusual for people to get 50k from their parents when buying a house so 5k might not even flag for them.


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    #16
    Prospector1989
    Registered Users Posts: 212 ✭✭Prospector1989


    Benjamin Rancid Resort wrote: »
    Tbh they might not even bother asking when it’s only 5k. It wouldn’t be unusual for people to get 50k from their parents when buying a house so 5k might not even flag for them.

    We received a smaller amount than this (as a wedding present from parents) and the bank required a letter stating it was a gift and they weren't expecting it back.

    The bank wanted to know that:

    a) Our ability to repay the mortgage wouldn't be compromised by having to by back this loan.

    b) That they (parents) wouldn't be holding any interest in the property as they had gifted us money.

    We also nearly had to borrow from family to meet a shortfall. If we did, we'd have paid it back but again the bank would have required a letter stating it was a gift.


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