Daughter Buying Me A House: Pitfalls? Advice?

19lottie82

I hear on here a lot that lenders don't like "gifted" deposits, but my Mum gifted mine (thanks Mum! :j), this was fully disclosed at the time and nothing was even mentioned about it. The lender was Halifax btw.....

HOWEVER, I did have a good (in fact, great) credit rating, a perm job and no other debt....

WoodruffsDad

pmlindyloo wrote: »

There is absolutely nothing wrong with gifting a deposit to your daughter.

However, the majority of mortgage lenders need proof as to where the deposit comes from (usually for money laundering purposes) and also to see that it has not been taken out via a credit card/loan etc and has to be paid back, possibly creating financial problems in the future for the 'borrower'.

In your case they need to know that the deposit will not have to be paid back. If it did have to be paid back then it may create a problem as regards f your daughter's potential ability to service the mortgage.

Your financial adviser will advise you about this and should support you with any problems if they arise.

In most cases a letter stipulating that it is a gift and evidence of the money (through a bank statement for example) is all that is needed. Something like this, maybe: http://www.slough-mortgage.co.uk/examplegifteddepositletter.html

Please do not be put off by some of the answers on here. You asked for potential pitfalls and this forum always makes sure that you are aware of all possible scenarios

The lenders just need to be assured that they will be able to get their money back and this means that you may have to jump through a few hoops.

Good luck with it all.

Thank you pimlindyloo

kingstreet

WoodruffsDad wrote: »

It would be a "gift" from me. What's wrong with that? If that's a problem she could say "savings".

Isn't the government encouraging parents to finance their children's first venture on to the property ladder?

That's a deposit to help someone to buy a property they plan to live in.

Unfortunately, not only will she be asked for evidence of deposit, she may well be asked to provide an audit trail of it building up in savings. Several thousand pounds appearing in her account one day will set the alarm bells ringing.

If she/you do go the buy to let route, the property will need to be able to justify a rental income of 125% of the monthly mortgage interest, assuming a mortgage rate of around 6%. In addition, some lenders need a personal income of £25,000, sometimes more.

Finally, as the property will be more than 40% occupied by a family member, this is what's known as a "regulated" BTL. That means it falls under the jurisdiction of the FSA and the usual residential mortgage consumer protection applies. As a result of that, many of the BTL specialist lenders won't wish to lend.

I recommend speaking to a good whole market or independent broker about this. You could commit to spending on fees, only to find the lender won't accept all the issues involved in the case. Ask friends and relatives for a recommendation. Failing that, use https://www.unbiased.co.uk as lindyloo suggested. Remember to switch off the "website/email only" option and this will ensure you get a full list for your area, not just the paid-for adverts.

MelaBella

pmlindyloo wrote: »

There is absolutely nothing wrong with gifting a deposit to your daughter.

However, the majority of mortgage lenders need proof as to where the deposit comes from (usually for money laundering purposes) and also to see that it has not been taken out via a credit card/loan etc and has to be paid back, possibly creating financial problems in the future for the 'borrower'.


Good luck with it all.

The solution: you withdraw money from the bank put in a black suitcase, bring it to daughter, she declares to bank/solisitor that this is her own savings. Where did they come from? From matress! preferred to save in a mattresse rather than in a bank. thats it. is there anything illegal in this? if its a legal way then its a way to do ot rather than bothering with the gift , etc

Annisele

MelaBella wrote: »

The solution: you withdraw money from the bank put in a black suitcase, bring it to daughter, she declares to bank/solisitor that this is her own savings. Where did they come from? From matress! preferred to save in a mattresse rather than in a bank. thats it. is there anything illegal in this? if its a legal way then its a way to do ot rather than bothering with the gift , etc

Yes, there is very definitely something illegal in that - it's called fraud!

Mojisola

19lottie82 wrote: »

Also, be aware that if you ever have to apply for housing benefit then it is likely to be rejected, as your potential arrangement could be viewed as a "contrived tenancy".

As the OP will have given away a lump sum to his daughter, it's unlikely that he would be able to get benefits anyway - not just HB but benefits relating to care as well.

pmlindyloo

Mojisola wrote: »

As the OP will have given away a lump sum to his daughter, it's unlikely that he would be able to get benefits anyway - not just HB but benefits relating to care as well.

This does depend on the savings. Any savings may be joint ones and split for care home fees.

As long as the OP doesn't have huge savings this wouldn't be a problem.

Since the OP says he can afford the rent and taking into account his age it seems likely that his income is too high for benefits anyway. Otherwise he would be claiming Pension credit and gurantee pension credit would entitle him to full HB. No savings limit for PC. Just a reduction over £10000.

skintandscared_2

So if you give your daughter the deposit, and pay the monthly mortgage payments, who owns the house?

Mojisola

pmlindyloo wrote: »

This does depend on the savings. Any savings may be joint ones and split for care home fees.

As long as the OP doesn't have huge savings this wouldn't be a problem.

Since the OP says he can afford the rent and taking into account his age it seems likely that his income is too high for benefits anyway. Otherwise he would be claiming Pension credit and gurantee pension credit would entitle him to full HB. No savings limit for PC. Just a reduction over £10000.

It's important to look to the future as well as the present situation.

WoodruffsDad

skintandscared wrote: »

So if you give your daughter the deposit, and pay the monthly mortgage payments, who owns the house?

She does. And when my wife and I snuff it she takes over and does what she wants with it: rent it out, live in it, sell it.........