Assalamualaikum
Does anyone have experience of borrowing money from friends and family to put down a deposit to buy a house? Some of them prefer to pay us cash.
Any tips on how best to do this? Any pitfalls to avoid?
Jazaakumullah
Salaam,
It is my understanding that for anti-money laundering checks, you must have the money in your account for at least 6 months prior to your mortgage application, especially as they are giving you cash.
I gifted my sister a decent some money for her deposit, but transferred it to her bank account with the reference ‘Deposit Gift’, and had to supply 6 months bank statements of my own to prove I had enough funds to gift that much money, and not be expecting it back. Remember if your family is only lending you the money, then it is considered a debt that need to be repaid, and the mortgage company will factor that in accordingly.
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Waalaikumassalam
Jazaak Allah for your reply. Do you know what the rules are for money gifted from family who live outside the UK (my brother, not a UK citizen).
Jazaak Allah once again
I’m sorry, I do not know.
I would suggest speaking to a mortgage advisor to discuss what your options are.
One thing that I did in my sister’s situation, was that I also signed a declaration that the money was a gift and not a loan.
Your situation seems slightly different as your family will be giving cash and not paid into your account, so you might have to explain where that money came from.
My brother will transfer it formally through the bank. I just need to be sure it’s acceptable before I put him through the hassle.
I guess it’s sensible to ask the mortgage advisor. (I’m guessing you mean the mortgage person I deal with at the bank, please correct me if I’m wrong)
Jazaak Allah for the advice
Yes, whoever you’re dealing with to arrange the mortgage. However, I would say you might get different advice if you spoke to an independent mortgage adviser/broker, as they don’t work for the lender (i.e. the bank), and so may be able to give more hints on how to maximise your deposit without increasing your debt.
If your brother is lending the money (not giving), then I can’t see why it would be an issue, just have to remember they will factor that in your debts.