Gifted Deposit from wife and its implications

averageish

I might not be correct in this, but I would have simply not told them where the cash came from as when it's between husband and wife, I believe legally, it is none of their business. I believe you can exchange money with your spouse without limitation and without notifying HMRC.

Banks often do things like this just to get more signatures on bits of paper and often, they have no right to at all.

If I was in this position, I'd back track on it and say that because of the silly paperwork I'd dip into my "other savings" account for the money instead, rather than tie my wife into any form of contractual agreement for a mortgage which is not hers.

This applies doubly in your case as the money is yours.

kingstreet

averageish wrote: »

I might not be correct in this, but I would have simply not told them where the cash came from as when it's between husband and wife, I believe legally, it is none of their business. I believe you can exchange money with your spouse without limitation and without notifying HMRC.

Banks often do things like this just to get more signatures on bits of paper and often, they have no right to at all.

If I was in this position, I'd back track on it and say that because of the silly paperwork I'd dip into my "other savings" account for the money instead, rather than tie my wife into any form of contractual agreement for a mortgage which is not hers.

This applies doubly in your case as the money is yours.

In which case, he will be required to provide evidence of the other account and show the build up of savings in there over a number of months.

James_B.

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 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

If I were the lender, I'd be running, not walking, away at this point. A "gifted" deposit, that was yours really, but was sitting unconnected to you in an unlinked account, of someone with credit issues...

The lender will (rightly) see that there are a whole host of reasons for such a strange arrangement, very few of which are legitimate ones.

If you are going to ask an institution to advance you a large sum, and trust you to pay it back, it's never a good idea to go into the deal with your finances arranged in the same way that a fraudster or criminal would favour. Keeping your own money in your own accounts is generally the safest route.

averageish

kingstreet wrote: »

In which case, he will be required to provide evidence of the other account and show the build up of savings in there over a number of months.

Yes, which is what he should have done in the first place really. Declaring a gifted deposit in this case was a mistake and has unnecessarily complicated matters.

I'm not sure I agree with the assessment by James_B that the situation is strange. Remember, this is his wife, not an unconnected third party.

There are a whole host of reasons why situations like this may arise. Couples often move money around for tax reasons and compromised credit history does not automatically give rise to suspicion!

In the event of your death, as has been said, in the absence of a will to the contrary, your assets will automatically pass to your wife as next of kin. In a divorce, the distribution of assets will be handled by the court and the waiver your wife signed for the bank can be offered as evidence, but as someone mentioned, it is up to the judge how much weight it is given. They do tend to be very fair and thorough.

Mortgage_Mark_2

averageish wrote: »

Yes, which is what he should have done in the first place really. Declaring a gifted deposit in this case was a mistake and has unnecessarily complicated matters.

He'd still have the same problem as, if the lender had asked for proof of deposit, the money is in someone else's account. Forget the taxation or otherwise of transferring money from a wife to a husband, that is irrelevant for mortgage lenders.

kingstreet

averageish wrote: »

Yes, which is what he should have done in the first place really. Declaring a gifted deposit in this case was a mistake and has unnecessarily complicated matters

I disagree.

If the funds are not in the applicant's sole name, or in an account in someone else's name, it would have to go the gift route and a lender should be selected which would be happy with;-

the gift

the donor residing in the property.

Such a transaction needs careful pre-planning and attention to detail for it to be acceptable to a lender.

averageish

Mortgage_Mark wrote: »

He'd still have the same problem as, if the lender had asked for proof of deposit, the money is in someone else's account. Forget the taxation or otherwise of transferring money from a wife to a husband, that is irrelevant for mortgage lenders.

I'm suggesting that if he had transferred it prior to application, say a month or two before, nobody would have batted an eyelid. Yet because he has gone into such detail with the bank, he is now being penalised for it, as often happens.

Both scenarios are essentially the same, neither are fraudulent, morally questionable or illegal. The only difference between the two is that he has actually told the bank that the deposit will come from his wifes account - post application. As a result, they are demanding extra paperwork.

It's another hoop, just because they can and whilst you cannot fault a lender for securing their own interests, this really serves no firm purpose. I would ask a solicitor, but I do not think that agreement has any force whatsoever, since this is your wife. I think someone has potentially made a mistake in asking her to sign it. It just doesn't make any sense to me.

I am not saying I am 100% correct, just something to debate and perhaps, a cautionary tale.

I think money transfers and applicable laws are somewhat relevant to mortgage lenders, they are required to do checks for fraud and money laundering are they not?

kingstreet

He would have to have the deposit in his sole name at least three months in advance of a mortgage application and possibly more, depending on the due diligence of the solicitor acting for him, as he has lender and solicitor hoops to jump through.

Mortgage_Mark_2

averageish wrote: »

I'm suggesting that if he had transferred it prior to application, say a month or two before, nobody would have batted an eyelid. Yet because he has gone into such detail with the bank, he is now being penalised for it, as often happens.

Both scenarios are essentially the same, neither are fraudulent, morally questionable or illegal. The only difference between the two is that he has actually told the bank that the deposit will come from his wifes account - post application. As a result, they are demanding extra paperwork.

It's another hoop, just because they can and whilst you cannot fault a lender for securing their own interests, this really serves no firm purpose. I would ask a solicitor, but I do not think that agreement has any force whatsoever, since this is your wife. I think someone has potentially made a mistake in asking her to sign it. It just doesn't make any sense to me.

I am not saying I am 100% correct, just something to debate and perhaps, a cautionary tale.

I think money transfers and applicable laws are somewhat relevant to mortgage lenders, they are required to do checks for fraud and money laundering are they not?

As Kingstreet says, there's absolutely no guarantee that your method would work at all, it would need to be a minimum of three months before application, ideally six months.

Underwriters would certainly ask what a transfer of several thousand pounds was and where it had come from, and then the circle begins again.

NothingExpert

kingstreet wrote: »

He would have to have the deposit in his sole name at least three months in advance of a mortgage application and possibly more, depending on the due diligence of the solicitor acting for him, as he has lender and solicitor hoops to jump through.

This if any thing was my mistake. Being a First Time Buyer i hadn't realized, otherwise I've had the money for months, and could have easily transferred before, but alas hadn't realized. But no point crying over spilt milk.