mortgage deposit is cash.

Soot2006

I had some help from Bank of Mum & Dad - they transferred the money to me (from abroad) several months before the purchase.

I said it was an "early inheritance" (i.e. gift from parent) on the mortgage application and was prepared for a big faff to defend it's legality seeing as it had arrived from abroad and was a substantial sum. Parents were of course ready to provide letter to state it was a gift, etc .... and then no on ever asked. Broker said it was because it was already in my bank account and had been for a while so lender never required any reassurances. Solicitor took my word that it was legit too ... Hmmmmm, maybe I have a trustworthy face ...

[Deleted User]

If you are going to repay the money to your father after the mortgage proceeds (once the mortgage company requires your deposit to be paid to them) then you need to declare that the deposit is a loan, not a gift, most mortgage providers will not accept a deposit that is loaned -- although if you're repaying in a lump sum from a property sale they may be more amicable.

If you don't declare that it's a loan then you're committing fraud and your mortgage can be revoked should you get caught.

ognum

I would ask your Dad to pay this into his own bank, after a few days he can then transfer it to you.

I do think there will questions if this money is paid by you into your account in cash, it could have come from lots of dodgy dealings, you need to keep your account clean!

BitterAndTwisted

If you're planning to repay your father from the proceeds of the sale of the property you co-own now, why can't you use your share of that equity as a deposit on the new one?


This would avoid having to prove the origin of your father's money was legitimate or him signing a declaration that this money was a gift rather than a loan. People don't normally keep large amounts of cash at home, even if it was saved up from their pensions over decades, never mind gifting it as deposit, unless it was possibly acquired via non-taxed sources

ValHaller

BitterAndTwisted wrote: »

If you're planning to repay your father from the proceeds of the sale of the property you co-own now, why can't you use your share of that equity as a deposit on the new one?


This would avoid having to prove the origin of your father's money was legitimate or him signing a declaration that this money was a gift rather than a loan. People don't normally keep large amounts of cash at home, even if it was saved up from their pensions over decades, never mind gifting it as deposit, unless it was possibly acquired via non-taxed sources

Probably because the sale of that property will not happen until after OP purchases the property they are now looking at buying.

But, if the is the situation, B&T, I think you are more or less on to a solution. If Father made a private mortgage loan of the money, secured on the house to be sold, that could well be enough to protect the interests of the lender.

kellyt86

Soot2006 wrote: »

I had some help from Bank of Mum & Dad - they transferred the money to me (from abroad) several months before the purchase.

I said it was an "early inheritance" (i.e. gift from parent) on the mortgage application and was prepared for a big faff to defend it's legality seeing as it had arrived from abroad and was a substantial sum. Parents were of course ready to provide letter to state it was a gift, etc .... and then no on ever asked. Broker said it was because it was already in my bank account and had been for a while so lender never required any reassurances. Solicitor took my word that it was legit too ... Hmmmmm, maybe I have a trustworthy face ...

My broker nor mortgage lender never requested any letters either despite me stating it was a gift. Mine was also as early inheritance and was a cheque (paid into account) about a month before mortgage application. Lender has all my bank accounts seeing this also.

Also solicitor never asked for a letter either. Although I stated it came from father initially.

I_have_spoken

Any cash deposit over £10,000 the bank will make a routine report, that's the law on money laundering.

I see some issues you'll need to be clear about -

1) Has your father been claiming any means-tested benefits while having £15,000 in cash hidden away? If not, you're OK!

2) You'd need to think about your father passing away unexpectedly. Have you any brothers/sisters? If so, you'd need to draw up a legal document to make it 100% clear within the family this £15,000 is a loan and not a gift. Seeing a chunk of money go to a sibling breaks up families!

3) Also, a person can only give £3,000 in total in each tax year and avoid Inheritance Tax. If your father's estate is worth less than the IHT threshold, this isn't a problem.

4) > loan will be paid back when my ex and I sell our house< Has the divorce completed and you're assets legally split? Don't want the ex suddenly claiming 50% of the asset you've gained

I'd certainly speak to the bank manager before your father turns up with £15,000 in notes, so you're not queuing out the door with a suitcase full of cash!

floozie_2

Wonderful pool of knowledge here, many thanks for all your input.

I went to my bank today, explained the situation, there will be no problem, I just need to book an appointment rather than just turning up, and pref. not at lunchtime.!

I did think I would ask my father to write a letter but it wasnt asked for.

Thanks again.

Duskylady

Just been through this scenario with 15000 gifted from parents for deposit. My broker and solicitor needed to see the following

Parents gifted deposit letter.
Copies of parents bank statements showing the source of the money.
Parents Id documents.

This money cannot be a loan so make sure your dad is happy to gift it to you. However should you choose to gift it back to him at a later date well.....

Be open with your broker when you see him he'll be able to advise what may need to happen. I suspect the money will need to be in an account for a certain amount of time I.e. 6 months before you can use it.

Mattygroves2

Did this recently (but not bundles of cash) gifting stepson a substantial amount for his house purchase. Solicitor advised to transfer to stepson's account rather than solicitor direct to avoid money laundering / proof of Id. OH also had to sign a letter to say it was an unconditional gift but no bank statements were required.