Gifted deposit

HDON91

Hi everyone,

first time poster so please bare with me! 

My boyfriend and I are hoping to buy our first home this year. We are lucky enough to have a deposit gifted from my parents. I have a couple of questions regarding declaring the gift when we eventually find a house we like:

1. What evidence will we likely be asked to provide to prove the deposit is gifted?

2. I’ve also used some of the deposit to pay off some debts prior to applying. Will this have any effect as if my parents are asked to provide bank statements showing the transfer for example (I’ve read in previous posts this can happen) would it affect our application because the deposit amount now is smaller than they transferred? 

Advice much appreciated 🤗

Thanks in advance! 

Chris_English

Your parents will likely be asked to write a letter or sign a form stating that the money is a gift, that it comes with no conditions attached, and that it will not form the basis of a claim on any of the equity in the house.

They may also want to see the source of those funds, as the bank will need to satisfy the anti money-laundering regulations. If it comes from savings, for example, they may want to see some statements showing that it was built up from wages over time.

Your solicitir should be familiar with what's needed and able to take you through it; the requirements shouldn't be onerous.

The fact that the gift had two parts, some went to pay off your debts and some went to be a deposit doesn't matter, but of course if they've given you (for example) £30,000 and you;ve paid £5,000 of debts off you aren;t going to be able to use that £5k as part of the deposit.

A gifted deposit isn't viewed as the same as a saved-up one, as the latter shows that you have your financial affairs in order and have enough spare income to make savings from. For this reason it may be a good idea to use a good independent mortgage broker to avoid applying to anyone who might have an issue with it.