Gifted Deposit from wife and its implications

NothingExpert

Dear MSE

I recently applied for a mortgage with Natwest and asked for the mortgage just to be on my name as my wife has credit issues. Some of the funds for the deposit have come from her account and so Natwest are asking my wife to sign a Confirmation of Gifted Deposit.

Wife is happy to do this except the wording on there is quite worrying. It says (emphasis mine):

I/We confirm that the gifted deposit to the above named applicant(s) towards the purchase of the property stated above is an unconditional and non-refundable gift and I/we will have no rights or interest in the property whatsoever, OR if the gifted deposit is from a family member and is subject to a subsequent charge or family trust arrangement where the only condition is repayment of the gift upon the sale of the property I/we confirm that the only condition is that if the property is sold I/we will require the full amount of gift to be repaid, I/we confirm that no interest is charged, I/we do not require any repayments to be made and I/we will have no other interest or claim upon the property.

I have two questions

• What does this mean for my wife in case of divorce
• What does this mean for my wife if something happens to me - e.g. hit by a bus

Any thoughts on this would be much appreciated

GMS

Providing deposit and residing in the property whilst not party to the mortgage is an issue for many lenders.

Have you made the lender aware that your wife will reside upon completion?

ACG

If you were to divorce it would mean theoretically from the lenders point of view she has no say in the property what so ever.

If it ever went to court you could provide this document as evidence she has given it to you - how the judge would view it however could be completely different.

If something were to happen to you, it doesnt matter as the property would pass to her anyway, however assuming there is no life insurance for instance then she would be expected to get a mortgage in her own right to pay off your mortgage.

As GMS says though, I would double check they are aware your wife will not be in the property. A lot of lenders do have issues with this.

kingstreet

In approaching a lender with such a case, you need to ensure that;-

lender is happy with spouse not on mortgage/deeds

lender is happy with someone who will live in property gifting part of deposit while not being on mortgage/deeds

spouse is happy to give written confirmation they give up any right to prevent the lender repossessing the property.

The lender wants the gifted deposit letter to wave under the judge's nose in a repossession hearing and nothing else.

In a matrimonial court, it wouldn't trump a spouse's right to equal division of property in the event of divorce.

Thrugelmir

If your wife has credit issues where is the cash she is investing coming from? If they credit check her then concerns will be raised. As the gift can be legally overturned potentially to the detriment of the lender.

NothingExpert

GMS wrote: »

Providing deposit and residing in the property whilst not party to the mortgage is an issue for many lenders.

Have you made the lender aware that your wife will reside upon completion?

Yes - they are aware

NothingExpert

kingstreet wrote: »

In a matrimonial court, it wouldn't trump a spouse's right to equal division of property in the event of divorce.

Thank you, this answers my question. Assume this also applies in case of my death?

Lender are aware and have accepted the situation.

NothingExpert

Thrugelmir wrote: »

If your wife has credit issues where is the cash she is investing coming from? If they credit check her then concerns will be raised. As the gift can be legally overturned potentially to the detriment of the lender.

Good point, its actually my cash...that i kept in her bank account. I've tried explaining this but not getting much luck and am just wondering that rather than have to pull out 10 years of paperwork to prove the point, it would be easier to sign the form

Thrugelmir

NothingExpert wrote: »

Good point, its actually my cash...that i kept in her bank account. I've tried explaining this but not getting much luck

Hardly surprising. Just muddies the waters even further.

kiddakidda

GMS wrote: »

Providing deposit and residing in the property whilst not party to the mortgage is an issue for many lenders.

Have you made the lender aware that your wife will reside upon completion?

This very issue (albeit without the marriage bond) happened to my potential buyers recently.

She was in full time education with a large inheritance, he was in a job that didn't cover her as a dependent on the mortgage but she wanted to be on the deed due to her fronting a large deposit.

Anyway, they were poorly advised and when she realised that many 1000's of her inheritance was at risk she pulled the plug.

Annisele

If you die, then your assets will pass according to your will (or by the rules of intestacy if you don't have a will).

If you want to make sure your wife keeps the property, then you need to make a will giving it to her, and have enough life assurance to pay off the mortgage. You might prefer to have the life assurance written in trust for her benefit, but your adviser will be able to sort that out for you.