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Gifted Money to Buy House - Repaying After Sale
djclaz
Posts: 9 Forumite
Hi all
We have seen a house we really like and know that it is going to move fast. The issue is that we are only just on the market and with no viewings yet I expect the property will have an accepted offer pretty shortly.
We are in the position where the money for the property could be 'given' to us and then in theory we could repay approx 80% once our house sells. This would obviously put us in a strong position with an offer as it would be a cash buy. The remaining 20% would actually be a gift to us.
I am hoping someone can advise what the implications of this might be and what the best way of going about this would be.
Would the money we would be given be classed as a gift (it would not be more than £325k) and if so, once we returned 80% of this, would the gift only be the remaining 20%?
Would the money have to be gifted to us first i.e. in our bank account before the sale completes or could this just be paid by the person on the day?
Any advice would be appreciated as I don't want to do anything considered underhand and that could have implications on us down the line.
Many thanks
We have seen a house we really like and know that it is going to move fast. The issue is that we are only just on the market and with no viewings yet I expect the property will have an accepted offer pretty shortly.
We are in the position where the money for the property could be 'given' to us and then in theory we could repay approx 80% once our house sells. This would obviously put us in a strong position with an offer as it would be a cash buy. The remaining 20% would actually be a gift to us.
I am hoping someone can advise what the implications of this might be and what the best way of going about this would be.
Would the money we would be given be classed as a gift (it would not be more than £325k) and if so, once we returned 80% of this, would the gift only be the remaining 20%?
Would the money have to be gifted to us first i.e. in our bank account before the sale completes or could this just be paid by the person on the day?
Any advice would be appreciated as I don't want to do anything considered underhand and that could have implications on us down the line.
Many thanks
0
Comments
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If it's a gift, it's a gift. There is no expectation of repayment.
If it's a loan, it's a loan. With an expectation of repayment.
A "gift" that's expected to be repaid is not a gift, it's a loan.
It sounds like this is 80% loan, 20% gift.
BUT... if there's no mortgage, then there's really no issue here. You can borrow as much money off people as they're happy to lend you. The only time the difference is relevant is when a lender asks if your equity is yours (gift=yes, loan=no), or if you've borrowed it.
Your solicitor will tell you when he wants the money to be available - but you certainly want to get it to him in time for him to be certain he can complete, which may well mean prior to exchange.0 -
So would you be buying by all cash?
In which case its effectively just a personal bridging loan.
So you'd just have to have money laundering checks done by the solicitor on the source of the funds and yes those funds could be transferred from the "giftee" to the solicitor without going through your bank account.
If i was the "giftee" I'd also want a charge put on the house to protect my money.
When its completed then you get get a mortage for the 80% and giftee writes off the 20%.
Alternatively giftee gives you 20% (which you then pay to solicitor) and passes 80% to solicitor directly again with charge on house.
Then later it would be a straight swap of new mortgage paying off giftees money afterwards.0 -
it would not be more than £325k
I love this, you almost make it sound like a small sum of money.
If there is no mortgage, there is no major issue. If there is, then your options are going to be limited.I am a Mortgage AdviserYou 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.0 -
Out of interest, is this amount being lent on pure trust or will there be a charge placed on the property?
The money would only be 'a gift' assuming there are no restrictions placed on the property. The person issuing the gift would have to sign a declaration to that effect with your solicitor. The money can stay in their bank but they will definitely be required to provide bank statements for AML checks. Assuming you're buying without a mortgage, you can essentially do what you want.
The person definitely couldn't pay on the day as you suggest - the funds would need to go to the solicitor before completion.Know what you don't0 -
Oh, and don't forget you'll need to pay the +3% SDLT, although it will be refunded if your old place sells within three years.0
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Why mention £325k?0
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IHT threshold?0
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getmore4less wrote: »the question was "why "if it was that then extend it to why do they think that is relevant.
What? There was a good reason to mention what they did and I saw no issues with it.0 -
What? There was a good reason to mention what they did and I saw no issues with it.
Given their post there is a good chance they don't really understand the potential significance.
For a start they would have to know the donors potential IHT exposer in much more detail they could have up to £650k NRB.
The donors gifting history can also significantly impact the outcome.0
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