Gifted deposit and residing in the property

Cumblechook

Problem...  

First time buyer 

My mother wants to move in with me....  I have said yes ( I always wanted to live with her in her later years)   All is well.   She suddenly says I have some money for you.  Its a good sum and she is ready to do the gifted deposit letter etc.  

I have told the solicitors that mum will be living with us.  I told the mortgage advisor the same, but was told that this will very much limit the lenders willing to allow someone gifting the deposit to live in the property.    I have told my mother this and to be honest its no problem for her (she is concerned for us), she will be happy to move in with my sister and still gift the deposit,

What happens when I tell the solicitors this?   
Is there some sort of penalty?  

user1977

The "penalty" is not getting a mortgage for that scenario.

Jemma01

Don't know sorry, but it got me thinking, can a parent pay that money towards the mortgage account directly without having to go through all this declaration process? Will they question where that money had come from during the term?

EssexHebridean

Jemma01 said:

Don't know sorry, but it got me thinking, can a parent pay that money towards the mortgage account directly without having to go through all this declaration process? Will they question where that money had come from during the term?

If the mortgage company discovered this was happening, they would potentially view it as fraudulent activity. Honestly? It’s really not worth taking the risk trying to fiddle things like this, not least as the OP has already told their solicitor - who is almost certainly acting for the lender too - about both the gifted deposit and the original plan for the Mum to move in…

OP - just tell your solicitor that your Mum’s plans have changed and that she is now relocating elsewhere. They may still feel that they need to tell the lender about the conversation though, be aware of that. If they DO - then please don’t see this as them trying to disrupt your transaction. They have a duty of care to act in the best interests of both of their clients, and this unfortunately sometimes means upsetting one to fully fulfill that duty to the other. 

Best advice here for others who may find themselves in similar situations is to always fully look into the potential pitfalls as far as you can before mentioning it to the solicitor, and be mindful about mentioning things to your solicitor that their lives may be made substantially easier by you never having disclosed in the first place!