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gifted deposit lender wanting insurance??
stassy23
Posts: 404 Forumite
Hi i was after a bit of help.
We have a mortgage offer and my parents are gifting £14,000 for a deposit.
Looking at the terms and conditions it says that we might have to take an insurance policy to protect lender because its gifted from parents.
My mum filled in paper work stating they are gifting it and do not want anything to do with the property etc.
Do we have to take out insurance seems very unfair as we're ftb seems to be more and more we have to pay out.
Thanks for helping
We have a mortgage offer and my parents are gifting £14,000 for a deposit.
Looking at the terms and conditions it says that we might have to take an insurance policy to protect lender because its gifted from parents.
My mum filled in paper work stating they are gifting it and do not want anything to do with the property etc.
Do we have to take out insurance seems very unfair as we're ftb seems to be more and more we have to pay out.
Thanks for helping
0
Comments
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You need to ask your solicitor.
As a gift can be reversed if the donor becomes insolvent, lenders sometimes require indemnity insurance against the legal cost of being sued for the return of the funds.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Some Lenders do request this type of insurance which normally has a one off premium around £200. As KS says, you should discuss this with your solicitor.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Thank you to you both.0
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Would it be a problem if the person gifting the deposit had a bad credit history?0
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If a bad credit history is a euphemism for "on the verge of insolvency", you might have a problem.
If they had a default for £100 three years ago, probably not.
TBH I have never heard of a solicitor credit checking a donor, but they may well be asked to sign a declaration of solvency.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Part of the reasoning with the gift indemnity insurance is to protect against the donor becoming bankrupt.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
kingstreet wrote: »TBH I have never heard of a solicitor credit checking a donor, but they may well be asked to sign a declaration of solvency.
Usually a search to check they're not already bankrupt, plus a statutory declaration that they're not insolvent. Haven't encountered any further checks before.0 -
I just got an on-line quote for insolvency act policy for various amounts
£80 £40k
(stopped at £40k £80 seems the minimum premium with that providor)0 -
Perhaps it is less about the insurance and more about an earner for the solicitor?I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
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