Mum lending 10k for deposit - is this taxable?

AubreyMac

I'm a FTB and have a sale agreed.

I've registered with solicitor and ready to instruct them (just waiting on a named conveyancer from the firm to pass to agent).

My mum has agreed to lend me 10k for my deposit on top of my own savings. I just pay back whenever I can.

Going through the mortgage with the building society today, I mentioned my savings plus the 10k that my mum will lend.

Lender put me on hold for a long time then comes back to say that he requires in writing what my mum will lend, what the repayment plans are and that she has no interest in my property, and this letter must be signed by my mum. This is all so much hassle. I then asked if I can just add 10k to my deposit, he said that now that I mentioned my mum lending me the money I can't change it as the call is recorded.

To speed things up, would it be easier to say this is a gift instead of lend? if so, would 'giving' 10k to someone subject to tax?

As the mortgage app stalled at this stage, I could just go somewhere else and add 10k to my savings if it's quicker.

gazter

You cant just 'add' 10k to your savings. When they look at your statements the sudden appearance of £10k from your parents will get flagged up and you will be asked for the source. Its not unusual for parents to help out, the bank wants to be sure that only you (and whoever else is on the mortgage) has an interest in the property, a third party becomes more difficult if they need to take possession.

AubreyMac

Thank you.

I've been advised that I should mention this as a 'gift' instead of saying my mum is 'lending' it to me as lending implies I'm in more debt.

Would there be any truth in this?

Hence why I ask if it's a gift, is it taxable?

comeandgo

Gifts are not taxable

gazter

AubreyMac wrote: »

Thank you.

I've been advised that I should mention this as a 'gift' instead of saying my mum is 'lending' it to me as lending implies I'm in more debt.

Would there be any truth in this?

Hence why I ask if it's a gift, is it taxable?

It isnt the tax which should worry you (a gift like this isnt taxable), your mortgage company would consider a loan from your parents as they would any other credit and adjust their risk accordingly.

The mortgage company wants to be sure they are giving you the money.

amfan

AubreyMac wrote: »

Lender put me on hold for a long time then comes back to say that he requires in writing what my mum will lend, what the repayment plans are and that she has no interest in my property, and this letter must be signed by my mum. This is all so much hassle.

Shouldn't be too much hassle, quick letter declaring she is gifting you £10,000 towards your deposit. I don't remember it causing me any hassle when I had to do the same

Foxy-Stoat_3

amfan wrote: »

Shouldn't be too much hassle, quick letter declaring she is gifting you £10,000 towards your deposit. I don't remember it causing me any hassle when I had to do the same

Because the Mum is lending £10K, not gifting, as confirmed to the lender.

Cheeky_Monkey

AubreyMac wrote: »

I'm a FTB and have a sale agreed.

I've registered with solicitor and ready to instruct them (just waiting on a named conveyancer from the firm to pass to agent).

My mum has agreed to lend me 10k for my deposit on top of my own savings. I just pay back whenever I can.

Going through the mortgage with the building society today, I mentioned my savings plus the 10k that my mum will lend.

Lender put me on hold for a long time then comes back to say that he requires in writing what my mum will lend, what the repayment plans are and that she has no interest in my property, and this letter must be signed by my mum. This is all so much hassle. I then asked if I can just add 10k to my deposit, he said that now that I mentioned my mum lending me the money I can't change it as the call is recorded.

To speed things up, would it be easier to say this is a gift instead of lend? if so, would 'giving' 10k to someone subject to tax?

As the mortgage app stalled at this stage, I could just go somewhere else and add 10k to my savings if it's quicker.

If you think that your mum writing a simple letter is so much hassle, you are in for an almighty rude awakening when you become a house owner. Assuming you manage to get through the buying process itself of course.

amfan

Foxy-Stoat wrote: »

Because the Mum is lending £10K, not gifting, as confirmed to the lender.

I think you miss my point, gifting or lending the letter shouldn't be "a hassle" it is just a letter....

Glover1862

Letter is sufficient for now, it must be declared as a gift and she has no interest in the property. Later, the solicitor had to do a Statutory Declaration (£95.00 in my case) which had to be taken to another firm of solicitors to be sworn (£5 fee).. it's a pain.

MisterB1959

I just did the same for my daughter and had to confirm that the deposit was a gift and that I had no 'charge' on the property.


the way it was SIMPLY explained to me was that building societies need to be sure of getting their money back, if my daughter defaulted they want complete rights to sell the property to get back their debt, if I had a 'charge' (or rights) on the property I could refuse to sell and they couldn't get their money back.



there was no tax to pay