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  • Buy-to-Let

    Mortgage problem

    Im buying a house off someone I know. We agreed a price but the seller needed some money asap (couldnt wait for slow mortgage process) so I sent him 3000 and we agreed to knock it off the purchase price. Now the mortgage company can see this transfer on my bank statement and want to know what it was for before continuing with the mortgage application.

    If I tell them the truth (i.e. this payment was in part to purchase the propery) will they not like this? Or should I just tell them its for something else totally none related.

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    Igg, Iggy

    Come on by now you should know how to work the system!?

    Transfer the monies from your bank account to accounts you may have and draw the monies out from ATMs

    In any month I can draw out £1200 per day

    Nothing strange occurring

    Very shortly I will be transferring a very large sum of money to someone

    Everyday I will draw out £1200

    No bank queues, just visit the ATM 4 mins walk away from me.

    No one will know where the cash has gone.

    You need to plan these things better to satisfy lenders

    Doing things that are out of the ordinary are unwise.

    Lenders only feel comfortable with normality

    So you must ensure you create it, especially if you are going for a mortgage!!!

    This is what I have done for over 35 years and up till 2010 achieved nearly everything I wanted.

     You need to plan things better in future.

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    Lenders like normality and transparency for a very good reason - it is part of their risk management process.

    I think it is strange that you would advance someone £3K.  What is your security for the money?  They could back out from the sale and just refuse to refund your money.

    If you are not truthful when answering lender questions, it is tantamount to fraud, so my advice is to be honest with them and explain the situation.   That is far preferable than trying to pull the wool over their eyes imho.  You could perhaps call it a "holding deposit" to convince the vendor that you are serious about the sale.  I don't see why a lender would have an issue with that.  The £3K can be deducted from the deposit monies on completion, so does not really affect them.  Transparency and truthful answers are always the best policy when dealing with lenders.

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    Vanessa is indeed right a holding deposit is probably the best way to go.

    I had a situation similar to this a few years ago. I was buying from a friend and he needed money quick so I LENT it to him, to be repaid on the successful completion of the sale to me. We had a simple loan agreement drawn up and I placed a caution on the house for security. When the sale completed he repaid the loan in full, in fact his solicitor retained it from the balance as per the caution.

    We confirmed this to the lender and the solicitors involved and no one had issue with it.

    Honesty is always the best policy.

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    Landlord with 25 years’ experience in the property market and a specialist in tenant referencing, ID and credit screening. Creator of identity, credit and anti-money laundering system ValidID.co.uk