When is a gift not a gift?

Justadmin88

Hi all,

My partner and I have just had an offer accepted on our FTB home, so we're very excited. Naturally I'm already imagining every single thing that could go wrong between here and completion, and today I'm thinking about our deposit.

We have 55k, which translates as just over 20% of the property price. 46k was given to me a year ago by an elderly couple who are like grandparents to me (they're neighbours from when I was little, they never had grandchildren) but we're not related. That money has been in an account in my name for the last year. 4k is from my partner's savings, and 5k is from my mum and dad, who literally just transferred me the money this morning, so that too is in an account in my name.

I'm trying to wrap my head around what (if asked) we will need to say is a gift, none of the websites I've been on are very clear. Technically, yes, we were give most of it, but the vast proportion has been legally mine for a year, my surrogate grandparents couldn't claim it as theirs now if they wanted to. I mean really my partner could probably say that some of his 4k is technically "gift" as some of it is past christmas and birthday money that was gifted to him.

Apologies for the potential ignorance of all this, whilst I have been reading up I'm still very green to mortgage information!

Thanks,

Matthew

kingstreet

The £46k from non-blood relatives will be an issue for some lenders.

In total £51k is gifts, the other savings.

ACG

I cant remember which lender it was, but I had a similar query albeit the gift was from a blood relative.

The account manager basically said at what point does a gift become savings. Its been in the bank for 6-12 months and hasnt been spent therefore its been saved.

Im not sure if its shaky ground or not, but it sounded like a good argument at the time.

kingstreet

It normally depends on the solicitor's view, rather than the lender's.

xylophone

If you are asked for the source of the funds you will need to say what portion was gifted.

Regardless of whether the money is now yours (it is), it was given to you.

If IHT is a consideration for your parents or your neighbours, HMRC would certainly regard the money as gifts - both parties should note their records.

Justadmin88

Okay thanks guys - so there may be some maneuverability on what is termed a gift and what is termed savings? I guess I'll wait to see what the Solicitor says.

amnblog

Talk this through with your mortgage broker in the first instance.

missmortgagehunter

I'm afraid I can't help but I need the same advice.. this post has got me thinking. I have a 15% deposit of £13,800.00. My grandad has helped by giving me £3,000 towards this which I HAVE claimed as a gift, to both the lender and my solicitor. However, in September last year, I was given access to £6,000 which had been saved since I was born by my Nan and when she passed away, my Grandad took over the account. Would that be a gift too? Even if it had been 'saved' for me? I haven't stated this on any of the paperwork because I didn't class it as a gift, more of a savings account in a family members name, and our full mortgage application has been submitted today. Does anyone have experience in this?

Thrugelmir

ACG wrote: »

The account manager basically said at what point does a gift become savings. Its been in the bank for 6-12 months and hasnt been spent therefore its been saved.

That misses the point.

A gift of any kind results in the 3rd party having a financial interest in the property. Which is to the detriment of the lender in the event of difficulties with the mortgage borrower.

worid

I gifted a deposit for my daughter. I had to write a letter to Nat West saying that it was a gift and they were satisfied. They don't like to think that anyone else has a financial interest in the property so if the person who has given the gift is willing to say this, it should not be a problem.

Thrugelmir

worid wrote: »

so if the person who has given the gift is willing to say this, it should not be a problem.

A letter unfortunately does not offer full protection against the gift being retracted in certain circumstances.