Declaring 'gift' for deposit - hidden costs??

MrsManda

phlash wrote: »

It's a sad time isn't it.....we rely on our parents to gift us a deposit.

We didn't rely on our parents for our deposit. We had enough saved up for 30% deposit and nearly keeled over with shock when we were told that my inlaws was going to give my OH and his brother cash to go towards a house. From their point of view it seemed like a sensible thing for them to do to reduce the amount of inheritance tax which will have to be paid when they die. From our point of view, it was great and we used it to reduce the amount the LTV of the mortgage even further

phlash

MrsManda wrote: »

We didn't rely on our parents for our deposit. We had enough saved up for 30% deposit and nearly keeled over with shock when we were told that my inlaws was going to give my OH and his brother cash to go towards a house. From their point of view it seemed like a sensible thing for them to do to reduce the amount of inheritance tax which will have to be paid when they die. From our point of view, it was great and we used it to reduce the amount the LTV of the mortgage even further

You're a lucky one.

This article is an interesting read:

http://www.independent.co.uk/life-style/house-and-home/property/no-place-like-home-the-generation-who-cant-afford-to-buy-1921781.html

EDIT: So as not to hijack this thread, any discussion on it can be had here:
https://forums.moneysavingexpert.com/discussion/2483135

goteamliz

****Update****

Spoke to the mortgage advisor this morning and she had never heard of people being charged! She said the lender would most likely require a simple letter to say the money is a gift etc.

However the Solicitor is still insisting that this cost of £200 is necessary. They quoted the following:

"Therefore the mortgage lender requires us to take into account the following:

1. The source of funds from which your deposit is to be provided
2. How such funds have been accumulated in the accounts(s) from which payment to us of the money is to be made
3. I will require copies of
a. the account passbooks, or
b. the bank statements where such funds have been and are

If the funds are not being obtained from your own accounts, then a Statutory Declaration from the account(s) holder(s) setting out and enclosing the above must be supplied and supporting identity documentation from them. The declaration must also contain the following information:
- Their relationship to you
- An explanation of why they are financing your purchase
- That the monies are a gift
- That they have no financial interest in the property you are purchasing
- That they are solvent and are not subject to any bankruptcy proceedings

In addition to the above the mortgage lender stipulates that they require an indemnity policy to support the statutory declarations.

I am also required to obtain clear bankruptcy searches against all parties to any deed of gift. "

Has anyone ever be faced with this before. She might just be being thorough but I'm on a very tight budget and don't want to spend £200 if I don't need to!

phlash

goteamliz wrote: »

****Update****

Spoke to the mortgage advisor this morning and she had never heard of people being charged! She said the lender would most likely require a simple letter to say the money is a gift etc.

However the Solicitor is still insisting that this cost of £200 is necessary. They quoted the following:

"Therefore the mortgage lender requires us to take into account the following:

1.The source of funds from which your deposit is to be provided
2.How such funds have been accumulated in the accounts(s) from which payment to us of the money is to be made
3.I will require copies of
a.the account passbooks, or
b.the bank statements where such funds have been and are

If the funds are not being obtained from your own accounts, then a Statutory Declaration from the account(s) holder(s) setting out and enclosing the above must be supplied and supporting identity documentation from them. The declaration must also contain the following information:
-Their relationship to you
-An explanation of why they are financing your purchase
-That the monies are a gift
-That they have no financial interest in the property you are purchasing
-That they are solvent and are not subject to any bankruptcy proceedings

In addition to the above the mortgage lender stipulates that they require an indemnity policy to support the statutory declarations.

I am also required to obtain clear bankruptcy searches against all parties to any deed of gift. "

Has anyone ever be faced with this before. She might just be being thorough but I'm on a very tight budget and don't want to spend £200 if I don't need to!

Well, your solicitor has kindly given you everything that you might reasonably be expected to give to the lender. You can now draft the letter for your parents to sign if the lender asks for it.... job done.

Cannon_Fodder

"In addition to the above the mortgage lender stipulates that they require an indemnity policy to support the statutory declarations.

I am also required to obtain clear bankruptcy searches against all parties to any deed of gift."




Indemnity policies and Searches cost money...

LillythePink

getmore4less wrote: »

That must mean it is a loan!

Without a charge how can they be sure to get there money back if others put charges on the property to its full value?

No it is a gift, but given that they have sold their house to give us the money, it is only right that if we (say split up) they get their money back to enable them to live elsewhere - its more for their protection than anything as they are almost retired.

Their names are not on the title deeds or anything - as for secured loans etc, rightly or wrongly, the advocate (solicitor to you) has put them third in the pecking order the first being bank/secured loans, 2nd fees, 3rd them - they are happy with that.



As for the OP's issue - as said, they have told you what you need to provide so provide it - or go straight to the lender and ask them what they want - it could be that your solicitor is just tying up all ends, but if you can save the money then good.

Thrugelmir

goteamliz wrote: »

****Update****

Spoke to the mortgage advisor this morning and she had never heard of people being charged! She said the lender would most likely require a simple letter to say the money is a gift etc.

However the Solicitor is still insisting that this cost of £200 is necessary. They quoted the following:

"Therefore the mortgage lender requires us to take into account the following:

1.The source of funds from which your deposit is to be provided
2.How such funds have been accumulated in the accounts(s) from which payment to us of the money is to be made
3.I will require copies of
a.the account passbooks, or
b.the bank statements where such funds have been and are

If the funds are not being obtained from your own accounts, then a Statutory Declaration from the account(s) holder(s) setting out and enclosing the above must be supplied and supporting identity documentation from them. The declaration must also contain the following information:
-Their relationship to you
-An explanation of why they are financing your purchase
-That the monies are a gift
-That they have no financial interest in the property you are purchasing
-That they are solvent and are not subject to any bankruptcy proceedings

In addition to the above the mortgage lender stipulates that they require an indemnity policy to support the statutory declarations.

I am also required to obtain clear bankruptcy searches against all parties to any deed of gift. "

Has anyone ever be faced with this before. She might just be being thorough but I'm on a very tight budget and don't want to spend £200 if I don't need to!

For the record your solicitor is not just representing you but the lender. Your solicitor is duty bound to deal with any request made the lender prior to requesting drawdown of the monies before to completion.

There are good reasons why this information may be required. In summary mortgage fraud or depravation of assets.

If you are struggling for £200 then can you really afford to be buying a property?

sillysue

post deleted

goteamliz

Thrugelmir wrote: »

If you are struggling for £200 then can you really afford to be buying a property?

Hi

We're not struggling to pay the £200, we are just trying to avoid being charged for things that aren't actually needed or that we can do ourselves.

We have got ourselves a mortgage and a property that is well within our means, we're just being shrewd!

Thrugelmir

goteamliz wrote: »

Hi

We're not struggling to pay the £200, we are just trying to avoid being charged for things that aren't actually needed or that we can do ourselves.

We have got ourselves a mortgage and a property that is well within our means, we're just being shrewd!

Then don't waste your solicitors time unneccessarily as you will be charged for it.