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Aston Lawyer
Aston Lawyer, Solicitor
Category: Law
Satisfied Customers: 10343
Experience:  Solicitor LLB (Hons) 23 years of experience in Conveyancing and Property Law
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, My mother has given me an opportunity of buying a house

Resolved Question:

Hi,
My mother has given me an opportunity of buying a house by giving me 25k for a deposit for a mortgage. However, it's part of a Trust agreement whereby it mentions the amount as a loan with interest. I can only explain if you see the deed. Q: will this affect all mortgage applications:
WHEREAS, This trust deed succeeds any previous trust arrangement between the parties and stands superior to any arrangement within the deed of that earlier trust dated 13th August 2009.
WHEREAS, the Settlor is the owner of the Property set in Schedule A.
WHEREAS, the Settlor wishes to settle on the Trustee that Property set out in Schedule A for the benefit of the beneficiary set out below.
WHEREAS, the Trustee for his part is willing to accept the Property set out in Schedule A on trust for the beneficiary and to hold the Trust Fund for their benefit and ultimately for the benefit of the Remaindermen.
NOW, THEREFORE, IT IS HEREBY AGREED as follows:
DEFINITIONS In this Trust Deed the following terms shall be defined:
‘The Trust’ shall mean the trust created by this Trust Deed.
‘Property’ shall mean that property set out in Schedule A.
‘Trust Fund’ shall mean that Property set out in Schedule A as well as any and all additional settlements which may be made from time to time as well as any and all income of any sort whatsoever earned by or as a result of the trust Property and any additional settlements.
PROPER LAW: This deed shall be established under the laws and statutes of England and Wales.
PARTIES TO THE DECLARATION: This agreement is entered into by Mr ADULT2 SURNAME and Mr ADULT3 SURNAME as trustees and Mrs PARENT SURNAME as settlor.
BACKGROUND: The Trustees are desirous of providing residential accommodation to Mrs PARENT SURNAME for the remainder of her natural life, free and without let or hindrance, in accordance with the wishes of Mrs SURNAME and as provided for by this Declaration of Trust.
POWER TO MAKE LOANS: In addition the trustees shall be granted a power at their absolute discretion to advance trust capital, held on deposit at a UK clearing bank within an account specifically held to act as a depository for trust capital in the forms of loans to remaindermen. Such loans shall be governed by the contents of the loan agreement contained at Schedule B.
AGREED TERMS: The definitions and rules of interpretation in this clause apply to the whole of this Trust Deed
PROPERTY: Shall initially mean that property listed in Schedule A, and latterly any additional property acquired under the terms of this Deed.
ADDITIONAL TRUST CAPITAL: The trustees shall reserve the right to accept further additions of trust capital by the settlor at their absolute discretion.
SETTLOR: Shall mean Mrs PARENT SURNAME
TRUSTEES: Shall mean Mr ADULT2 SURNAME and Mr ADULT3 SURNAME both being sons of the settlor; and such Trustees as may be appointed to serve alongside the said Mr ADULT2 SURNAME and Mr ADULT3 SURNAME. The named Trustees, shall hold sole authority to appoint Trustees, such appointment must be the unanimous decision of both named Trustees.
BENEFICIARY: Shall mean Mrs PARENT SURNAME currently of***** Daws Heath, Benfleet, Essex SS7 2UU.
REMAINDERMEN: Shall mean Mr ADULT2 SURNAME, Mr ADULT3 SURNAME, Mr ADULT1 Philip SURNAME and Mrs ADULT4 Siobhan Edwards the children of the settlor.
LEGAL CHARGE: Shall mean a mortgage or other encumbrance secured against the property, this shall extend to all charges including those not entered in the title deeds of the property.
COMMENCEMENT DATE: Shall mean 13 March 2015, unless amended at the discretion of the Trustees after the date this declaration is signed.
POWER TO ADD BENEFICIARIES: The Trustees shall have the power at any time and at their discretion to appoint additional beneficiaries by written declaration provided always that the new beneficiary shall not be an excluded person.
POWER OF EXCLUSION: The Trustees shall have the power at any time and at their discretion by written declaration to remove any Beneficiary under the trust as well as the power to exclude any person (beneficiary or otherwise) to the list of persons excluded from benefit under the Trust.
PURPOSE OF THIS AGREEMENT: The intent of this agreement is to act as a declaration of trust between the above named parties. The purpose of the declaration of trust is to reflect the desire of the settlor during her lifetime to create a life interest over such land and property as may be acquired by the trustees in favour of the settlor. That life interest shall commence on the commencement date and shall extend to free and unencumbered occupation of the property so acquired for the remainder of the beneficiaries natural life.
Should the beneficiary wish to move to a different property then the trustees shall be required to apply sufficient of the sale
Submitted: 1 year ago.
Category: Law
Expert:  Aston Lawyer replied 1 year ago.

Hello and thanks for using Just Answer.

My name is ***** ***** am happy to assist you with your enquiry.

As you will be financing your purchase by way of a Mortgage, your Mortgage Lender will insist on receiving a letter signed by your Mother to say the £25,000 is a gift.

I do not know of any Lenders who would agree to proceed with the grant of a Mortgage under any other basis, I'm afraid.

Therefore if you proceed, it will have to be on this basis as your Lender will not agree to allow the property to be subject to any form of Trust in favour of a third party.

I hope this assists and sets out the legal position.

Kind Regards

Al

Customer: replied 1 year ago.

Thanks Al, appreciate your answer.

The answer was as expected, I just now need to relay this back to my brother who insists it wouldn't be required.

So what you're saying basically is that as long as my Mum states the 25k is a gift, in theory, mortgage lenders would look at this in a more favourable manner.

Rob

Expert:  Aston Lawyer replied 1 year ago.

Hi Rob,

Thanks for your reply. You are correct- as long as your Mother signs a letter to say it is a gift, the Lender will be happy to proceed. However, if your Soicitor gets wind of the fact that there is an element of a loan involved, he would have to report matters to your Lender which would then jeopardise your Mortgage!

Kind Regards

Al

Aston Lawyer, Solicitor
Category: Law
Satisfied Customers: 10343
Experience: Solicitor LLB (Hons) 23 years of experience in Conveyancing and Property Law
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