Declaring a gift for mortgage app

leereni

If I am going to be given money from a parent do I need to pay tax on this?

Will the lender trace where the gift came from?

Are there any amounts which will be questioned?

Any advice please.

kingstreet

No.

You may be required to obtain a letter confirming the sum is a gift, bears no interest and the donor will not have an interest in the property.

Amounts? Not that I can think of.

Halifax case I'm working on at the moment, the Credit Decisioning Team has requested copies of the donors' bank statements showing the gifted deposit amounts visible in there.

leereni

What about the source of the money?

What if the grifter was to take out a loan and give this to the borrower?

lawriejones1

It would be largely irrelevant where the person gifting the money got it from, but if you are then hoping to pay it back it's a lot to take on. It's also a tough situation for them if they struggle with money in the future - will they want this back?

If it were me I'd save the money myself...

kingstreet

leereni wrote: »

What about the source of the money?

What if the grifter was to take out a loan and give this to the borrower?

I can't tell you any more than I have.

In the case in question, the Halifax asked for the gifted deposit letters mentioned, then the CDT asked for bank statements from the donors showing the amounts to be gifted, visible in those accounts.

I can't suggest what else they might ask for if the donor has just borrowed it, it's never happened to me...

leereni

Yes they'd want the money but I'd have no problem paying it back. I'm looking to get on the help to buy but feel based on my previous credit history I may need 10 %.

shonzyd

if your having to pay it back then its a loan and not a gift so i would think it needs to be declared as such.

mrginge

Who in their right mind would take out a loan, give the money to you and then tell your mortgage company that they didn't want the money back.

And what are they going to tell their lender this loan is going to be for?

holly_hobby

As Mr Gringe states, personal loans aren't generally accepted for house purchase or "gift" purposes - of course the reason for the loan could be lied about by the applicant.

As Kings. states, you and your Donor will need to complete a declaration stating that the loan monies are made without reservation, interest or requirement of repayment.

If you are repaying the loan that your parents are gifting, either by lump sum, or by effectively paying the monthly payment directly to them or the provider - this MUST be disclosed as it is both a gift with reservation, and a financial commitment (and may also fall out of bed if the UW establishes the association between this loan and your deposit, esp if as Kings states the request Donor statements, and clearly see both the date of the loan deposit and its obvious relationship to the "gifted" deposit).

Messy ... and just a tad underhand disclosure wise .... but ulitmately how you play it is up to you.

Parents gifting capital they hold to help children out is both lovely and generous, but to have parents take a financial commitment to do so isn't so nice IMHO .... perhaps wait a bit longer and build a bigger deposit without having to put extra financial burden on Mum/Dad ?

Hope this helps

Holly

leereni

Thanks.

Based on our rent being about £700 we are keen to get on the ladder. Given that an extra 5 % could mean 6 months wait that's £4200 gone.

Can you see why we are looking at the mortgage now?

leereni

Sorry I meant loan now?