Best way to go about gifting a house deposit?

Snookie12cat

You can gift him the money and have an informal arrangement to repay it. Once you start getting into formal agreements it is not a gift. 

getmore4less

Snookie12cat said:

You can gift him the money and have an informal arrangement to repay it. Once you start getting into formal agreements it is not a gift. 

Not a gift even with an informal arrangement not sensible to recommend mortgage fraud.

Snookie12cat

getmore4less said:

Snookie12cat said:

You can gift him the money and have an informal arrangement to repay it. Once you start getting into formal agreements it is not a gift. 

Not a gift even with an informal arrangement not sensible to recommend mortgage fraud.

I was told this exact thing by the lender. I.e " we don't care if you pay the money back out of the goodness of your heart, as long as there is no formal agreement".

user1977

Snookie12cat said:

getmore4less said:

Snookie12cat said:

You can gift him the money and have an informal arrangement to repay it. Once you start getting into formal agreements it is not a gift. 

Not a gift even with an informal arrangement not sensible to recommend mortgage fraud.

I was told this exact thing by the lender. I.e " we don't care if you pay the money back out of the goodness of your heart, as long as there is no formal agreement".

...which doesn't imply any sort of arrangement at the outset (whether formal or not) that that's what's going to happen. It does not of course preclude you from making a gift in the other direction at some point in the future.

dimbo61

Has your brother got a LISA ISA ?
Has he had one for a year ?
You can gift someone £3,000 each tax year and if you did not Gift any money last year you can Gift another £3,000 
So that's £6000
How soon is he looking to buy ?

MoneyGeoff

If it's a loan then it will affect his affordability checks with lenders. If he can pass that then he can still get a mortgage, although he may as well borrow more from the lender rather than borrow £20K from you.

If it's a gift then don't transfer the money yet, he needs to inform his solicitor. They'll ask you for a letter stating it's a gift and not to be repaid. You'll have to sign a document to state you have no interest in the property. You'll have to go through money laundering checks and provide bank statements/payslips to demonstrate the source of your funds.

If you say it's a gift but in reality you want the money back then the risk is on you. He might decided not to pay, or meet hardship and not be able to pay. Or he could pass away and if he has a wife and/or children then you can kiss the money goodbye because you've signed documents saying it was a gift not a loan.

ironlady2022

It's not really up to Lender. It's what you are willing to give and what you expect back
 Gift deposit will allow him to have more choice of lender as others have said. 

Thrugelmir

mayling03 said:

It's not really up to Lender. It's what you are willing to give and what you expect back
 Gift deposit will allow him to have more choice of lender as others have said. 

Lender holds all the legal rights though. That's the ace card. 

K_S

MoneyGeoff said:

If it's a loan then it will affect his affordability checks with lenders. If he can pass that then he can still get a mortgage, although he may as well borrow more from the lender rather than borrow £20K from you.

It won't necessarily impact affordability or be the same as borrowing from the lender.

For example, in most cases these kind of loans between family for the purpose of a deposit are in most cases interest-free (to be repaid upon sale of property, sometimes secured as a second charge on the property), or low interest-only (so the only commitment to be factored in is the interest payment). For interest free loans, there is no impact on affordability. For interest-only loans, the impact is limited to that of the periodic interest payment. I personally have not come across a case where the family member expected capital repayments on a strict schedule.

In comparison, borrowing it from the lender will usually be on a capital repayment basis, there'll be a loan to income cap, etc.