Mum lending 10k for deposit - is this taxable?

Pixie5740

If the £10k is a loan it would be just like any other loan of £10k be it car finance, or on a credit card, or a personal loan, it would impact your affordability. Whereas a gift is a gift and not repayable.

kingstreet

AubreyMac wrote: »

Thank you for replies.

My mum has agreed for it to be a gift and signed a letter that we both drafted this evening.

She even thought it was long winded too & said that she could just transferred the money to me as it is not the lender who would see the cash deposit.

Would mum's £10k mean the building society will lend me £10k less? Because if that's the case i can't afford the flat at agreed price and I might be better off terminating the application with this building society (no credit check has been done yet) & start afresh somewhere else & just increase my deposit by 10k.

Do you think lenders and their solicitors are niaive and unsophisticated?

Any large deposit coming into your account in the three months (possibly more) run up to your application being submitted will be questioned, if not by the lender certainly by your solicitor who will typically act for you and the lender.

The source will have to be evidenced and so you'll end up back in the same position.

Why not talk to a professional and get it resolved at the outset so you can relax? Buying a property is stressful enough without adding deception to the mix.

martindow

AubreyMac wrote: »

My mum has agreed for it to be a gift and signed a letter that we both drafted this evening.

The mortgage company probably wants to give you the precise wording for the letter. This happened when I gave some money to my son last year to help him buy a house.

I think they may receive your letter with some suspicion as you previously told them this money was a loan. I'm not clear whether your mother has changed her mind deciding to make this a gift or whether she has agreed to writing a letter while still expecting it to be repaid at some point.

AubreyMac

When my mum got made redundant a year ago, she got a nice pay out. This was due to her age & length of service taking the redundancy package was worth more than going through redeployment. Because of this I asked her if she'd be willing to lend me 10k & she said yes. That was it. We never discussed it further.

But last night we did discuss it further. She is willing to give me the 10k and does not expect me to pay her back (she did give money to my sibling after all when they got married & brought home). However, I personally don't like the idea of me not paying back so I intend to eventually give her small lump sums every now & then to repay this. I'm not sure if she will take it but her intention is to give this to me. My intention is just to borrow it.

derbyshirenick

I wouldnt assume having it as a loan will make a negative difference to the amount you can borrow. When I was originally playing with the calculators I experimented and found many banks would lend more if you had a bigger cash deposit but outstanding debt than a small deposit and were debt free.

Its worth going through it with somebody.

It was something like if I had 10,000 of debt and a 25,000 deposit I could borrow say 150 but if I had a 15,000 deposit and no debt I could borrow 80. It wasn't even proportionate to the deposit amount being 10%. This was an odd horsey bank though who made very odd offers in my case. I almost had the feeling they didnt want FTB business.