Funding checks when using money from a relative towards a property purchase?

BlokkedSinkk

We have only bought a property once before and the 'source of funds' part of the deal was very simple - money from our incomes, which we had to prove with bank statements if I recall, because of the money laundering regs. If it's more complicated and you're using either a loan or a gift from a family member towards the purchase, does anyone know what kind of verification they're likely to do on that?

My reason for asking is that my parents have very kindly offered to loan/gift us a bit of money to help us buy a bigger house, but the house we have in mind now is really close to them and I really want to surprise them as they are very keen to have us nearer, but have no idea we're considering it. However if the rules say people gifting or loaning money actually have to be contacted for verification it will potentially ruin the surprise. Does anyone know if we could support a gift/loan just using documentation or would the solicitor want to contact the source? If so would they only need confirmation that the loan was made or would they want to get into the details of the property? Would a gift be better than a loan for avoiding that, or no difference? Many thanks

eddddy

The solicitor would probably want to do the same anti-money laundering checks on your parents as they do on you.

i.e. Look at their past bank statements to see where the money came from.

But if you told the solicitor not to disclose the address of the property to your parents, I'm sure the solicitor wouldn't.

But if they ask the solicitor for the address, I guess the solicitor might say "I've been instructed not to tell you" - which might sound a bit ominous.

Although if the solicitor suspects that you are trying to trick your parents in some way - by hiding the address of the property - the solicitor might insist that your parents are told the address.





(If you're buying a property, and you parents are giving you a chunk of money towards it, I'd have thought they'd be curious and ask you what you're buying. Will you just tell them it's a surprise?)


FWIW, a lot of mortgage lenders don't like loaned deposits. You'll probably find it easier to get a mortgage if it's a gifted deposit.

MikeJXE

I loaned money to my granddaughter and had to show my solicitor my bank statement and write a letter confirming it was a gift not a loan

EssexHebridean

Are you getting a mortgage as well? If you are then the lender will require a “gifted deposit letter” signed by your parents confirming that the money is a gift and will not give them any claim over the property. This also usually has to state that the benefactor is not expecting the money to be repaid.

Keep_pedalling

MikeJXE said:

I loaned money to my granddaughter and had to show my solicitor my bank statement and write a letter confirming it was a gift not a loan

So it was a gift not a loan, and there is written proof of that.

MikeJXE

Keep_pedalling said:

MikeJXE said:

I loaned money to my granddaughter and had to show my solicitor my bank statement and write a letter confirming it was a gift not a loan

So it was a gift not a loan, and there is written proof of that.

Yes there was but in the end I bought her carpets instead 

user1977

Whether it's a gift or a loan, it's not an essential part of the process that the relatives know what property you're buying, if that's your question. Why not just talk to your solicitors about it?

BlokkedSinkk

eddddy said:

The solicitor would probably want to do the same anti-money laundering checks on your parents as they do on you.

i.e. Look at their past bank statements to see where the money came from.

But if you told the solicitor not to disclose the address of the property to your parents, I'm sure the solicitor wouldn't.

But if they ask the solicitor for the address, I guess the solicitor might say "I've been instructed not to tell you" - which might sound a bit ominous.

Although if the solicitor suspects that you are trying to trick your parents in some way - by hiding the address of the property - the solicitor might insist that your parents are told the address.





(If you're buying a property, and you parents are giving you a chunk of money towards it, I'd have thought they'd be curious and ask you what you're buying. Will you just tell them it's a surprise?)


FWIW, a lot of mortgage lenders don't like loaned deposits. You'll probably find it easier to get a mortgage if it's a gifted deposit.

Thanks, that's really helpful - I was planning on telling them we're buying a different one in our current city (we haven't fully decided on it or received any money from them yet), but if they have to be laundry checked as well it sounds like it might be difficult not to give the game away, I guess we'll just ask the solicitor to be discreet and see what happens. Maybe I'll surprise them earlier by taking them to look at the house or something, but it feels like jinxing the sale to do it before it goes through!

km1500

People sometimes don't like surprises ...