Gifted deposit from parents - have I made a mistake?

simplemike

Hi all,

I have a decent deposit saved up purely from my own income, of£40k.

My parents have been really great and given me £11,000 to help along with this to increase my deposit and help me on 'the ladder'.

They gave me the money through a bank transfer a few months ago, and I'm currently in the process of buying a place, with an offer accepted and mortgage approved, solicitors doing their thing and so on.

However, it's only just come to my attention that the money my parents have given me needs to be highlighted in some way (wrong term I know) to whoever needs to know, and I'm a bit unsure how to go about this.

I've read up online and there's a lot of talk of needing a letter from my parents specifying it's a 'gift', though from what I understand this shouldn't really affect my position in terms of the lender (Nationwide) and it's more a legal thing.

I'm wondering if this is treated somehow differently (for the lender) because the money is already in my account rather than coming from a separate payment from my parents to my solicitor (to then pass to the lender)?

Obviously I want to do whatever is right/legal, so any advice is appreciated.

How I've not made some terrible mistake as everything is going well.

Mike

Thrugelmir

Your solicitor will advise you as to what's required to evidence the deposit. There's no reason for the gift to be an issue.

Annisele

Don't worry about it. The lender will want to know where the money came from, but so long as your parents are prepared to sign something to say the money really is a gift (and so long as it was a genuine gift) it'll be fine.

Gifts can cause issues when: they make up the entire deposit; they're not from a close relative; they are from somebody who'll be living in the house; they're not really gifts (i.e. you're supposed to repay it), etc. I can't see any problems in the scenario you described.

getmore4less

Much easier when getting gifts is to use them for some of the normal spending and just save more from normal income.

Will look better on the bank accounts for the new rules as well.

Have a few months of regular spends that are reasonable, topped up with a bit of cash from the side pot for the luxuries.

Same with those with a deposit looking to increase their mortgage lending trim your visible expences for 6-12 months so it looks like you are spending at a lower level and saving more.

frisbeej

getmore4less wrote: »

Much easier when getting gifts is to use them for some of the normal spending and just save more from normal income.

Will look better on the bank accounts for the new rules as well.

Have a few months of regular spends that are reasonable, topped up with a bit of cash from the side pot for the luxuries.

Same with those with a deposit looking to increase their mortgage lending trim your visible expences for 6-12 months so it looks like you are spending at a lower level and saving more.

£11k is quite a lot of luxuries.


I don't see why a properly declared gift should be a problem at all.

BeauLiLuLu

Dear LENDER,

Re: PROPERTY ADDRESS

I confirm that I am gifting the sum of £00,000.00 to XXXXX (who is my son/daughter etc), in relation to the purchase of the above property. I have no legal interest in the property and will not be living in the property. This gift is not expected to be repaid.


Yours faithfully,
GIFT GIVER

simplemike

Hi all,

Have spoken to my solicitor and he says all should be fine, I just need to send an email (much like the one BeauLiLuLu drafted) stating it's a gift and a scan of my parents ID's and all should be fine.

Far as I can tell, this is less of an issue when applying (although I guess some Lenders might have issue?) and more of a legal thing in case something happens to my parents within the next 7 years which I really don't want to think about.

Thank you all for your advise, really appreciated.

Mike

Thrugelmir

simplemike wrote: »

Far as I can tell, this is less of an issue when applying (although I guess some Lenders might have issue?) and more of a legal thing in case something happens to my parents within the next 7 years which I really don't want to think about.

In addition to the above. From a lenders perspective loans are repayable and in certain circumstances can give the donor a financial interest in the property. Which results in the lender not having an encumbered charge against the property for the money advanced.

cevans65

All the bank will want to know is that it is a gift and not a loan that you will have to pay back - thus a letter saving it is a gift from your parents is enough.