Protecting Parental Gift for House Purchase

shirelets

Have searched forum but no definitive answer to my particular circumstances which I would think are fairly common.

I wish to gift 30k to my daughter to help with deposit for her first house purchase. Will do Gift Letter to satisfy broker / lender. I understand dying within 7 years tax implications.

Daughter is sole purchaser and mortgage borrower, no partner, spouse, children.

Would like to recoup this gift if possible e.g. if daughter died or for any reason house sold or repossessed. I’m not overly worried about interest or change in value if house value increases / decreases.

She could leave a 30k bequest to me in her Will which would cover the former. Maybe Declaration of Trust set up by e.g. the solicitor who does her conveyancing could cover the latter, but don’t fully understand if applicable to a simple gift and also maybe would result in lender etc regarding it as not a true no-strings gift.

Can anyone advise please? In a nutshell I want to gift my daughter 30k but try to recoup it if something unexpected happens, although I trust her integrity completely.

Annisele

shirelets wrote: »

Would like to recoup this gift if possible e.g. if daughter died or for any reason house sold or repossessed.

I think you need to decide whether or not you're happy to give the money to your daughter. If it's a true gift, you can't "protect" it because it isn't yours anymore.

If you're not actually prepared to gift the money, you might want to think about something like the Barclays Family Springboard Mortgage. (NB I'm not recommending Barclays, I'm just giving an example of a product - some lenders offer similar things).

mrginge

Ah so this is a pretend gift for the purposes of securing a mortgage and with a fraudulent declaration made to the lender.

Calling it a gift doesn't stop it being a loan.
Fortunately for the lender, your declaration will pretty much render any 'protection' you put in place specifically regarding the house as meaningless. Any private arrangement (e.g in a will) is obviously outside their scope, as would be any ongoing under the counter repayment that your daughter wished to make.

Of course, if she just decided to stop repaying or change her will again then you have no comeback. Similarly if she gets married & then divorced , her ex may kick off if you start trying to claim on the marital assets.

Annisele offers a sensible alternative that doesn't involve lying to a mortgage lender.

Deep_In_Debt

Could you put a "second charge" on the property? My parents did that with me when they helped with my house purchase many years ago.

Yorkie1

Deep_In_Debt wrote: »

Could you put a "second charge" on the property? My parents did that with me when they helped with my house purchase many years ago.

No. First charge has to consent - and it rather reveals the lie about the gifted letter too.

shirelets

Thanks for replies so far and I have already passed the suggestion from Annisele to my daughter. I would like to clarify for 'mrginge' who thinks my daugher and I are intent on defrauding lenders, that the reason for posting the question was to ask the forum for clarification on whether above board 'protecting' in any way what I intended as a genuine gift at the outset of the loan was possible in case of wholly unexpected circumstances. Both a broker and bank have already intimated to my daughter that it was possible to set up something, here's an extract from recent bank email to her: As for protecting your father's interest, one option is to draw up a "deed of gift/trust", thereby ensuring, that on the sale of the property, your father would receive his initial investment back, plus any interest, once the mortgage has been repaid. This can easily be arrange via your solicitor. As for a "2nd charge", this is not entirely out of the question but again is not ideal, and your solicitor would need to write to our Legal Team, to seek agreement.
I look forward to a few more responses to help me and my daughter as mortgage/loan/gift rookies understand what we can and cannot (or should not) do, but do hope folks don't assume we are simply out to con lenders. Thanks

kidmugsy

Annisele wrote: »

Barclays Family Springboard Mortgage.

We've recently had a letter from National Counties BS about a comparable scheme. Also Yorkshire BS do family offset mortgages.

getmore4less

shirelets wrote: »

Thanks for replies so far and I have already passed the suggestion from Annisele to my daughter. I would like to clarify for 'mrginge' who thinks my daugher and I are intent on defrauding lenders, that the reason for posting the question was to ask the forum for clarification on whether above board 'protecting' in any way what I intended as a genuine gift at the outset of the loan was possible in case of wholly unexpected circumstances. Both a broker and bank have already intimated to my daughter that it was possible to set up something, here's an extract from recent bank email to her: As for protecting your father's interest, one option is to draw up a "deed of gift/trust", thereby ensuring, that on the sale of the property, your father would receive his initial investment back, plus any interest, once the mortgage has been repaid. This can easily be arrange via your solicitor. As for a "2nd charge", this is not entirely out of the question but again is not ideal, and your solicitor would need to write to our Legal Team, to seek agreement.
I look forward to a few more responses to help me and my daughter as mortgage/loan/gift rookies understand what we can and cannot (or should not) do, but do hope folks don't assume we are simply out to con lenders. Thanks

I wonder if the banks compliance and mortgage underwriting teams would be interested in such letters going out from their staff.