Can I use a gifted deposit?

rainbow_fountains

Should note this post is on behalf of a friend, I already bought my home during lockdown using a savings for a deposit.

During lockdown last year when lenders started pulling mortgage products off the market, like the 90% and 95% mortgages, some lenders also announced restrictions on gifted deposits. Nationwide for example was only allowing up to 25% of the deposit to be a gift, the rest had to be your own money.

Does anyone know if these restrictions are still in place? Or could a FTB use a 100% gifted deposit from say an inheritance?

Also what evidence would they need to provide? This particular example is a little complex as it’s not a direct inheritance but rather one that’s been gifted through several parties (deceased great Aunt > living brother/grandfather inherited > given to grandchildren via mother on grandfather’s request as he’s not able to do it himself)

theartfullodger

That would depend on exact wording of each mortgage product from each lender.  £50 to an agreed housing charity if there is actually a universal always covering such restriction every product.

Sunsaru

Just as an example, my gifted deposit went Aunt(deceased) > my mother inherited > myself. 100% of my deposit came through this route.

So long as there is some form of paper trail all 'should' be well.*

*Subject to usual terms, conditions, caveats and wind direction.

rainbow_fountains

Sunsaru said:

Just as an example, my gifted deposit went Aunt(deceased) > my mother inherited > myself. 100% of my deposit came through this route.

So long as there is some form of paper trail all 'should' be well.*

*Subject to usual terms, conditions, caveats and wind direction.

Thanks! I hoped this would be the case and the previous 25% cap was just a lockdown blip.

user1977

If the last step has been by a variation of the Will (ie the money has come from the executors with the agreement of the intended beneficiaries) I would expect that to be treated as your own funds rather than as a gift at all. 

rainbow_fountains

user1977 said:

If the last step has been by a variation of the Will (ie the money has come from the executors with the agreement of the intended beneficiaries) I would expect that to be treated as your own funds rather than as a gift at all. 

That’s interesting, thanks I’ll keep that in mind

AFF8879

Would an inheritance count as a gift? Surely once it’s all officially gone through it is your “own money”.

MaryNB

AFF8879 said:

Would an inheritance count as a gift? Surely once it’s all officially gone through it is your “own money”.

The OP didn't directly inherit the money. It was inherited by a family member and gifted to the OP. Unless it's been done as per user1977's post.

dimbo61

I know that HSBC have no problems with gifted deposits 

Brie

I think that the worry will be that if the grandfather dies any time soon and whether the money will be subject to IHT.  The other issue may be if the grandfather needs the money to fund any care before their death.  

I know this is not what was being asked but those are the red flags I'm seeing.

chainpain

I don't think lenders have an issue. We used YBS and they queried a monetary gift and asked if it was towards the deposit. As it happened it wasn't but they said it was no problem if it was, would just require some extra paperwork.