Best way to go about gifting a house deposit?

imamutant

Hi,

My brother is a first time buyer and I'm helping out with £20,000 for the deposit. We're unsure of the best way to do this (To make things easier getting the mortgage/the lenders will like etc).

Should I transfer the money to his bank account beforehand, so the lender can see the funds in his account? Or, when it comes to making the deposit, we just pay that money from my account and the other money he has from his own?

I would like for the money to be repaid back to me in the future, and for there to be an agreement stating that the money is still mine. So whats the best way of doing this?
Do lenders prefer if it was just gifted and not to be expected to be paid back?

Just trying to figure out the best way to increase his chances of getting a mortgage. Thanks!

Edi81

If you want the money back it’s not a gift. Mortgage lenders don’t like gifts like that. 

Mojisola

If the deposit consists of a loan, the mortgage lender wouldn't consider it to be a deposit.

When we gave money to one of our offspring to put towards their mortgage, we had to sign to say it was a gift.

imamutant

Edi81 said:

If you want the money back it’s not a gift. Mortgage lenders don’t like gifts like that. 

Ok so the lenders would prefer for the money to be gifted with no expectation of being repaid?

user1977

imamutant said:

Edi81 said:

If you want the money back it’s not a gift. Mortgage lenders don’t like gifts like that. 

Ok so the lenders would prefer for the money to be gifted with no expectation of being repaid?

That's what a "gift" means, yes. You seem to be talking about a loan. That isn't going to work.

Thrugelmir

imamutant said:

Edi81 said:

If you want the money back it’s not a gift. Mortgage lenders don’t like gifts like that. 

Ok so the lenders would prefer for the money to be gifted with no expectation of being repaid?

Are you gifting or lending the money?  There's a distinct difference. 

imamutant

Thrugelmir said:

imamutant said:

Edi81 said:

If you want the money back it’s not a gift. Mortgage lenders don’t like gifts like that. 

Ok so the lenders would prefer for the money to be gifted with no expectation of being repaid?

Are you gifting or lending the money?  There's a distinct difference. 

I'm considering both options, my original post was asking if lenders prefer for it to be gifted. And if gifted over the loan option increases the chance of a mortgage?

imamutant

user1977 said:

imamutant said:

Edi81 said:

If you want the money back it’s not a gift. Mortgage lenders don’t like gifts like that. 

Ok so the lenders would prefer for the money to be gifted with no expectation of being repaid?

That's what a "gift" means, yes. You seem to be talking about a loan. That isn't going to work.

Yes I know what gift means. I was asking if lenders prefer the deposit being gifted instead or loaned

Thrugelmir

imamutant said:

Thrugelmir said:

imamutant said:

Edi81 said:

If you want the money back it’s not a gift. Mortgage lenders don’t like gifts like that. 

Ok so the lenders would prefer for the money to be gifted with no expectation of being repaid?

Are you gifting or lending the money?  There's a distinct difference. 

I'm considering both options, my original post was asking if lenders prefer for it to be gifted. And if gifted over the loan option increases the chance of a mortgage?

Some lenders do accept the money on a condition that repayment is only due upon sale of the property 

K_S

@iamamutant If it's a gift from a sibling, that will meet the criteria with the vast majority of lenders. You will be expected to sign a gifted-deposit letter, for example something like this https://www.halifax-intermediaries.co.uk/pdf/mortgage/gifted-deposit-letter-template.pdf

If it's a loan, you will be limited to a handful of lenders and they may have specific requirements as to how the loan can be set up.

[Deleted User]

I did the same for my son, I gifted him the deposit, it was years ago so cant remember all the tiny details. I think the money was paid into my sons account and he had to prove where the money came from, ( money laundering) I do remember though there was a lot of paperwork I had to sign. I had to prove I had sufficient funds in my bank account and I had to sign a declaration to say that I would not make any claim on the property being bought.
More info here. 
https://www.which.co.uk/news/2020/12/bank-of-mum-and-dad-how-to-gift-money-to-your-child-for-a-house-deposit/