Using gifted money as deposit

leespot

Hi All,

My girlfriends nan has offered to give us £20k deposit for us to buy another house. I already have a house (bought before we got together) in my name that we rent out, but her nan would like for her and her little girl to have an investment now rather than later. The next house purchase would be a joint mortgage.

My girlfriends nan would like to make sure the investment is safe should things not work out for us in the future. (ie me not run off with the money if we split up. I understand this as my partners ex stole a large amount of money from her)

What would be the best way of achieving this? Should we draw up a document with a solicitor stating what each of us put in at the start and what each should get in the event of us splitting up? Would this be a legally binding document? Really looking for the best way of making sure my girlfriend and little girls investment is as secure as it can be.

Thanks in advance!

cabbage

A Solicitor could draw up a declaration. Do you want her Nan to have a share in the property ie tenants in common with a 3 tenants named?

leespot

cabbage wrote: »

A Solicitor could draw up a declaration. Do you want her Nan to have a share in the property ie tenants in common with a 3 tenants named?

Morning Cabbage,

No, her nan is handing over the money as a gift for us to invest for my girlfriend and little girl (she is 7) so she has something for the future. It would just be my girlfriend and me on the mortgage. Her nan is early 80's and wouldn't like to have our house form part of her estate when she's gone.

Would there be any complications with the money being a gift and used for deposit? It will literally be a bank transfer, nothing formal through a solicitor. Maybe we'd need a letter from her nan confirming it is a gift?

Thanks!

BitterAndTwisted

Nan's funds can't be a protected "investment" once it's given as a gift. It's either a gift or it's not.

How any deposit funds can be protected is by having a Deed of Trust drawn up by a solicitor. This will protect both of your contributions, either by having the same amount deducted from the equity upon sale or by acquiring a percentage of the property's purchase-price.

leespot

BitterAndTwisted wrote: »

Nan's funds can't be a protected "investment" once it's given as a gift. It's either a gift or it's not.

How any deposit funds can be protected is by having a Deed of Trust drawn up by a solicitor. This will protect both of your contributions, either by having the same amount deducted from the equity upon sale or by acquiring a percentage of the property's purchase-price.

Thanks very much - exactly what I needed. I didn't think I had the wording right, but wasn't sure how else to put it It is a gift, but she would like to know that if we split up, my girlfriend and her little girl would have their money back.

A Deed of Trust seems to be the best way to go from what you've explained.

Foxy-Stoat_3

It should be based on the percentage rather than a lump sum, to protect everyone's interests including yours.

Assuming that the property would be sold and equity split accordingly soon after.

Very good idea to get all the what if's answered now while everyone is happy and talking, incase something happens in the future and things turn bad.

You and your partner will need to draw up a new Will also.

BitterAndTwisted

If you're buying together with a mortgage and only Nan's funds as a deposit the lender will probably require a declaration that the funds truly is a gift and not a loan. Expect your solicitor to draw one up.

You should consider the advantages/disadvantages of owning the property as joint-tenants/tenants-in-common if you're not married. Have the solicitor explain the difference to you especially where the child is concerned with regard to wills and inheritance.

kingstreet

Typically, a gifted deposit letter and donor bank statement will be required by the mortgage lender/solicitor during the purchase process.

leespot

We're not married so the type of ownership would be important. The funds are not the only source of deposit - we have savings too. A donor letter and bank statement wouldn't be a problem to sort out.

What we would like to happen is that should my girlfriend die, her share passes to me to look after for the little one.

We would like to draw up wills to this effect. Just want to cover as many bases as we can to make sure everyone is looked after if the worst happens.

Thrugelmir

Is your existing property mortgaged?

leespot

Thrugelmir wrote: »

Is your existing property mortgaged?

Hi, Yes mortgaged but approx 25k equity based on recent valuations.