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Gifting a deposit - any tips

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horsewithnoname
horsewithnoname Posts: 776 Forumite
500 Posts Third Anniversary Name Dropper
edited 31 December 2022 at 5:42PM in House buying, renting & selling
I am in a position to gift a fairly substantial deposit to a friend for a house. What sort of thing should I expect? It’ll be a transfer from my account to their account, but are there any implications I should be aware of re money laundering laws or anything else? 
It’s been decades since I bought a house so any help would be appreciated. My friend is a first time buyer, not sure if that makes a difference. 
Thanks in advance for any help. 

Just to add, I’m not trying to do anything dodgy, just help in providing a secure home for someone. 
«1

Comments

  • user1977
    user1977 Posts: 17,770 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    Is your friend getting a mortgage? Have they checked whether the lender will accept a gifted deposit from a friend?

    The money laundering requirements are for their solicitor to explain to them, we don't know specifically what they'll be. 
  • TheJP
    TheJP Posts: 1,951 Forumite
    1,000 Posts Third Anniversary Name Dropper
    Log on to bank account, transfer money, job done.

    however....

    If this gift is to be repaid then...

    Log on to bank account, transfer money, make sure to have a proper contract in place, make sure loanee understands the implications of loan or put a charge on house, mortgage may be denied.

    Pick one.
  • Choirgrl
    Choirgrl Posts: 162 Forumite
    100 Posts First Anniversary Name Dropper
    Mortgage lenders tend to only accept gifted deposits from certain ‘types’ of people, usually close relatives. Your friend should speak to a broker to understand if they are likely to be able to get a mortgage with this type of deposit, or what their other options could be.

    Re money laundering, the banks may well do checks at the time you move the funds. The solicitor will need to check source of funds as part of the conveyancing, and will likely need to see a paper trail of where the money came from in advance of you gifting it.
  • TheJP said:
    Log on to bank account, transfer money, job done.

    however....

    If this gift is to be repaid then...

    Log on to bank account, transfer money, make sure to have a proper contract in place, make sure loanee understands the implications of loan or put a charge on house, mortgage may be denied.

    Pick one.
    A gift isn’t something that would be repaid, surely that would be a loan?
  • Choirgrl said:
    Mortgage lenders tend to only accept gifted deposits from certain ‘types’ of people, usually close relatives. Your friend should speak to a broker to understand if they are likely to be able to get a mortgage with this type of deposit, or what their other options could be.

    Re money laundering, the banks may well do checks at the time you move the funds. The solicitor will need to check source of funds as part of the conveyancing, and will likely need to see a paper trail of where the money came from in advance of you gifting it.
    Oh right, they’d best get a mortgage broker then. 
    No issues with the source of the money, it’s all traceable and above board. 

  • user1977 said:
    Is your friend getting a mortgage? Have they checked whether the lender will accept a gifted deposit from a friend?

    The money laundering requirements are for their solicitor to explain to them, we don't know specifically what they'll be. 
    Probably will need a small mortgage, seems odd that a lender would be concerned, but thanks, something to bear in mind. 
  • If your friend is getting a mortgage the lender might send you a 'Declaration of gift' form.  You might be asked to show the paper trail, as well as providing ID.  
    £216 saved 24 October 2014
  • If your friend is getting a mortgage the lender might send you a 'Declaration of gift' form.  You might be asked to show the paper trail, as well as providing ID.  
    That’ll be no problem, thanks
  • user1977 said:
    Is your friend getting a mortgage? Have they checked whether the lender will accept a gifted deposit from a friend?

    The money laundering requirements are for their solicitor to explain to them, we don't know specifically what they'll be. 
    Probably will need a small mortgage, seems odd that a lender would be concerned, but thanks, something to bear in mind. 
    Lenders don't like "gifts" that end up needing to be repaid and I suppose how many friends give other friends large amounts of money and do not expect it back. Very few I imagine. 
    For this reason lenders are sceptical of gifted deposits from anyone who isn't a relative.

    They will need to get a broker to ensure they go with someone who is okay with this arrangement.
  • user1977 said:
    Is your friend getting a mortgage? Have they checked whether the lender will accept a gifted deposit from a friend?

    The money laundering requirements are for their solicitor to explain to them, we don't know specifically what they'll be. 
    Probably will need a small mortgage, seems odd that a lender would be concerned, but thanks, something to bear in mind. 
    Lenders don't like "gifts" that end up needing to be repaid and I suppose how many friends give other friends large amounts of money and do not expect it back. Very few I imagine. 
    For this reason lenders are sceptical of gifted deposits from anyone who isn't a relative.

    They will need to get a broker to ensure they go with someone who is okay with this arrangement.
    Well I’m happy to sign anything to say it is
     a gift not a “gift” (loan); is there a register of mortgage brokers like there is IFAs?
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