Gifted Deposit - DWP?

kirstle99

Hi all

In a few years we are hoping to buy my mother's house, which we currently rent. It's worth around £125k and she will be doing a gifted deposit of at least £20k.

1) My question is, do I have to declare this to the DWP? As this is effectively my inheritence but is NOT to be used for anything other than towards a house deposit, as stipulated by my mother in her current will. Do we just need to get this put into writing by the solicitor at the time of sale?

2) Also she wants this money to only ever go to me i.e. if me & DH split up (god forbid) then she would want me to get my £20k back first and then the sale to be split between us.

Sorry for all the questions I just want to know where I stand for when we go through with it.

Thrugelmir

A gifted deposit has to be "string" free. You mother will need a declaration to this effect. So you will need to reconsider your options.

kirstle99

Thanks for that. So can she still give me a gifted deposit and it all go towards the house though? Maybe best getting a financial advisor to have a look?

Mojisola

kirstle99 wrote: »

1) My question is, do I have to declare this to the DWP? As this is effectively my inheritence but is NOT to be used for anything other than towards a house deposit, as stipulated by my mother in her current will. Do we just need to get this put into writing by the solicitor at the time of sale?

Are you receiving any means tested benefits?

holly_hobby

kirstle99 wrote: »

Hi all

In a few years we are hoping to buy my mother's house, which we currently rent. It's worth around £125k and she will be doing a gifted deposit of at least £20k.

In this circumstance there is actually no gifted deposit (in the traditional sense) as no money is exchanging hands - in fact you are actually purchasing the house with a discounted sale price/preferred purchase arrangement due to the family connection - which is permissible with lots of lenders (subject of course to you meeting their status/affordability checks). So this won't cause any DWP issues . The fact you are on MT benefits/benefits - means that your chances of a mortgage may be slim however. (depending upon the nature of the benefits).

kirstle99 wrote: »

2) Also she wants this money to only ever go to me i.e. if me & DH split up (god forbid) then she would want me to get my £20k back first and then the sale to be split between us.

This can be arranged under a separate deed which will be invoked in the event of sale of the property and distribution of free equity - and wouldn't fall foul of the gift with reservation aspect in any event - as the Donor does not want the capital returned, but to remain with (albeit 1) of the mortgagors.

Hope this helps

Holly

kirstle99

Thanks for the replies. I guess I didn't explain myself very well sorry!

Yes that's exactly right, no money will exchange hands, the house will be valued at market rate as per a usual sale process.
We will get a mortgage for the market value, and then use the money my mother gifts us as a deposit, which I believe is allowed?

We get tax credits (childcare) and child benefit, nothing else.
My husband works 50hrs a week I work 33hrs.

I had heard if you have savings over a certain amount then you have to declare these etc but as the money will never exchange hands as such I wondered if such a declaration was necessary?

I just don't want to do anything wrong!

holly_hobby

Some benefits and TCs are accepted with various lenders (with proof, with not 100% of the benefit always taken as a mulitple with various lenders).

Free equity in your main residence isn't taken into account when claiming MT benefits - so the fact you will have say 10% equity (or whatever is donated), post Mums discounted sale price to you, shouldn't cause an issue.

Whether your accepted household income (earned income & accepted benefits) is sufficient to support and service a mge from the lenders point of of view, is all together a difference one of course !

Comments given in good faith and as an accurate guidance, but I'm not a welfare advisor, so do speak to the DWP to top and tail it just for piece of mind.

Hope this helps

Holly

kirstle99

Thanks for your reply. Yes i'll phone themto double check! This won't be happening for a little while yet as got some debt to pay off first.

I didn't know sometimes benefits were taken as income?!

I just didn't want it to affect our Tax Credits claim for childcare, because on the form it asks about savings etc so I just wondered if it had to be declared or not when the house is sold.

Feel better now and have my questions written down for the DWP etc so thank you :T

Errata

Benefits aren't classed as income as the reason for the benefit can't be guaranteed to continue, and indeed can vanish without warning overnight.

holly_hobby

In fact SOME benefits ARE taken as an acceptable source of income for mortgage purposes - but NOT ALL - but unless you're involved in mges you wouldn't be aware of that.

OP - if you obv release equity out of the property then that will naturally affect MT benefits, in relation to capital savings held and permitted allowances.

Hope this helps

Holly

Mojisola

Errata wrote: »

Benefits aren't classed as income as the reason for the benefit can't be guaranteed to continue, and indeed can vanish without warning overnight.

Not that much different to wages, then.