Gifts & lump sum towards mortgage

Hi,

just looking for some advice re mortgage application. My Boyfriend has applied to bank for mortgage and has been approved for 170k today based on providing extra documents - On the application he has stated a gift from his parents of 40k (which is actually coming from my dad) it is my part towards the house and also credit unions savings of 16k which 3k is his own build up savings and 13k is a lump sum put in which i contributed. He has yet to forward on the credit union statement.
they bank are sending out a letter tomorrow with approval amount and what other documents they need.
Q1 - will the lump sum put into CU today be an issue do you think??
Q2 - they have asked for letter from parents re gift amount stating this will not have to be paid back, does anyone know if this is just a general letter or would they have to get bank or someone else to sign..

No offence but this sounds like utter madness.

Your Dad is giving your boyfriend 40k yet will get no claim on the property for this.
What if you and your boyfriend split?

Why don't you go on the mortgage?

In response to your queries:

1) They are going to ask where the 13k lump sum came from.
2) His parents are going to have to lie stating they have given 40k as a gift. This is fraud pure and simple.

So his parents will be committing fraud, your Dad is giving away 40k, you are giving away 13k and he is putting up 3k...something not right here.

www.moneybackmortgages.ie

I think fraud is being a bit harsh, totally agree that this isnt the right approach to be taken but at the end of the day the 40k is still there and its being used for the same purpose so I cant see how the bank is being defrauded. From a taxation perspective however there is a big difference between your bf's dad giving him 40 k and your dad giving him 40k i.e. there would be gift tax payable of roughly €4,000 if your bf takes money from your Dad i.e. (40k - small gift exemption 3k - Group C threshold 2010 €20,740 =16,240 * 25% CAT = 4,065)

OP, are you a first time buyer?

" Need some advice about applying for a mortgage.
Myself and my partner would like to apply for mortgage approval. i already have a mortgage of 140k in my name which i got about 3 years ago to renovate a property in which i inherited. (the property is not in a location we could live due to work but hope to be able to summer let it this year)
We have about savings of 14k but this is from a saving we have done over the years through my parents i.e. no record of regular savings in the bank.
i earn about 30k and my partner the same.
any advice would be appreciated"

This is an old post from the same poster which might explain what and why they are doing and why they are doing it.

mf

NorfBank said:

... this sounds like utter madness. ...

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A bit harsh perhaps, but it certainly sounds like a poorly thought out plan, lacking professional advice and experience.

It sounds like trying to avoid stamp duty to me...

OP - be very very careful with this.

If you and your partner break up, the house is only in his name & your savings & your Dad's money is gone.......

I know you think this isn't going to happen but it does.

If your partner wants to buy a house on his own, then let him do it on his own. If you want to buy a house together, get saving and pay your stamp duty. I know it's a total pain - am currently saving for stamp duty at the moment - but anything else is just madness in my opinion. You're counting on getting married in the future I assume so that the house will become half yours? What if this doesn't happen?

You are getting caught up in a very complex transaction that could come back to bite you in the end.

moneyhoney said:

OP - be very very careful with this.

If you and your partner break up, the house is only in his name & your savings & your Dad's money is gone.......

I know you think this isn't going to happen but it does.

If your partner wants to buy a house on his own, then let him do it on his own. If you want to buy a house together, get saving and pay your stamp duty. I know it's a total pain - am currently saving for stamp duty at the moment - but anything else is just madness in my opinion. You're counting on getting married in the future I assume so that the house will become half yours? What if this doesn't happen?

You are getting caught up in a very complex transaction that could come back to bite you in the end.

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+1 Well put.

Yes we are doing it this way to try to avoid losing out on FTB and paying stamp duty as if i go in with him on the mortgage this will happen..

my BF has been paying the other mortgage with me for years so this is why we are doing it this way and that is in my name.

i would think by saying fraud is a bit harsh, at the end of the day we just want to get the money together for a house and the lump sum is by part towards the house. as he is getting the mortgage for the rest.
thank you for the advice

thank you qwerty08 for your advice, helpful towards understanding the tax towards gift

rosecottage said:

i would think by saying fraud is a bit harsh, at the end of the day we just want to get the money together for a house

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To be clear, you want to get the money together for your second house. This is fraud, and is likely to end in tears.

Thanks for all the advice, think i will get further advice, maybe this was not the right way to go about things

OP, I would strongly advise you to follow moneyhoney's advice.