Gift towards house purchase
Discussion
We are currently in the process of moving home (offers accepted on both sale and purchase). Yesterday when speaking with my father, he asked whether he could provide a contribution towards the onwards purchase (he has given my sibling a lot of money in the past and is I think getting more "aware" of the 7 years IHT rule).
We don't really need the money but equally it would be a big help and so I am very happy to accept it! The amount would be around £50k.
The money would be sat in my account prior to completion but I wanted to ask, how should I declare this gift and who to whom? Should I declare it to my solicitor, my mortgage provider, HMRC etc etc? My Dad and I have always been very transparent about money and we will keep our own records but I want to ensure that it s all declared correctly to the relevant people.
We don't really need the money but equally it would be a big help and so I am very happy to accept it! The amount would be around £50k.
The money would be sat in my account prior to completion but I wanted to ask, how should I declare this gift and who to whom? Should I declare it to my solicitor, my mortgage provider, HMRC etc etc? My Dad and I have always been very transparent about money and we will keep our own records but I want to ensure that it s all declared correctly to the relevant people.
LennyM1984 said:
We are currently in the process of moving home (offers accepted on both sale and purchase). Yesterday when speaking with my father, he asked whether he could provide a contribution towards the onwards purchase (he has given my sibling a lot of money in the past and is I think getting more "aware" of the 7 years IHT rule).
We don't really need the money but equally it would be a big help and so I am very happy to accept it! The amount would be around £50k.
The money would be sat in my account prior to completion but I wanted to ask, how should I declare this gift and who to whom? Should I declare it to my solicitor, my mortgage provider, HMRC etc etc? My Dad and I have always been very transparent about money and we will keep our own records but I want to ensure that it s all declared correctly to the relevant people.
You will need to declare it to your lender and your solicitor. You will need to provide both with a signed letter from your father confirming that the funds are a gift, not repayable and he will hold no charge over the property etc....We don't really need the money but equally it would be a big help and so I am very happy to accept it! The amount would be around £50k.
The money would be sat in my account prior to completion but I wanted to ask, how should I declare this gift and who to whom? Should I declare it to my solicitor, my mortgage provider, HMRC etc etc? My Dad and I have always been very transparent about money and we will keep our own records but I want to ensure that it s all declared correctly to the relevant people.
LennyM1984 said:
I want to ensure that it s all declared correctly to the relevant people.
There's no obligation or necessity to run about declaring anything. Just be ready to answer the questions when they get asked. It's all part of a box-ticking exercise that doesn't amount to a row of beans so, when the time comes, just provide the bare minimum amount of information to get the relevant boxes ticked. These processes can be absurdly intrusive. Panamax said:
LennyM1984 said:
I want to ensure that it s all declared correctly to the relevant people.
There's no obligation or necessity to run about declaring anything. Just be ready to answer the questions when they get asked. It's all part of a box-ticking exercise that doesn't amount to a row of beans so, when the time comes, just provide the bare minimum amount of information to get the relevant boxes ticked. These processes can be absurdly intrusive. When my father lent my girlfriend some money to buy her flat, the solicitor required evidence from him of where that money had come from, i.e. bank statements showing that the money had been in his accounts for some time, or a paper trail showing which investments he had cashed in to get it.
If you don't need the money fir the purchase why not just get him to give it you after it's gone through the park it somewhere building interest (some if not all) and then use it as and when you see fit.
Thus not having to get involved in declaring it and saving you "possible" hassle
Thus not having to get involved in declaring it and saving you "possible" hassle
Sarnie said:
You will need to declare it to your lender and your solicitor. You will need to provide both with a signed letter from your father confirming that the funds are a gift, not repayable and he will hold no charge over the property etc....
What’s the detail behind this that would cause the lender to need to know? If the OP before was putting, say £50K towards the house and now he’s putting in £100K can he not just say it’s from savings?I gave both my kids money towards their first houses and I don’t recall any drama over it, although it was a few years ago now.
Chris Peacock said:
Panamax said:
LennyM1984 said:
I want to ensure that it s all declared correctly to the relevant people.
There's no obligation or necessity to run about declaring anything. Just be ready to answer the questions when they get asked. It's all part of a box-ticking exercise that doesn't amount to a row of beans so, when the time comes, just provide the bare minimum amount of information to get the relevant boxes ticked. These processes can be absurdly intrusive. someone close to me got a large gift to buy their first home (6 fig) from parents, 5 odd years back now.
As it made up the bulk of the deposit and 50%+ equity of the property, when asked where is the deposit money coming from (first time buyer) he declared the large gift.
The lender made it a condition that he instruct a solicitor to draw up documents signed by him and his parents to state the funds were a one way gift, no repayment will be made and no claim on the property.
Now this could be because of the nature of the gift provided so much equity in the property, that the lender was so nervous they wanted an iron clad contract as requested. If you are receiving a £50k gift and buying a £1.2m property, they may not be bothered as much. But just pointing out this was the situation in this case.
As it made up the bulk of the deposit and 50%+ equity of the property, when asked where is the deposit money coming from (first time buyer) he declared the large gift.
The lender made it a condition that he instruct a solicitor to draw up documents signed by him and his parents to state the funds were a one way gift, no repayment will be made and no claim on the property.
Now this could be because of the nature of the gift provided so much equity in the property, that the lender was so nervous they wanted an iron clad contract as requested. If you are receiving a £50k gift and buying a £1.2m property, they may not be bothered as much. But just pointing out this was the situation in this case.
S1MMA said:
someone close to me got a large gift to buy their first home (6 fig) from parents, 5 odd years back now.
As it made up the bulk of the deposit and 50%+ equity of the property, when asked where is the deposit money coming from (first time buyer) he declared the large gift.
The lender made it a condition that he instruct a solicitor to draw up documents signed by him and his parents to state the funds were a one way gift, no repayment will be made and no claim on the property.
Now this could be because of the nature of the gift provided so much equity in the property, that the lender was so nervous they wanted an iron clad contract as requested. If you are receiving a £50k gift and buying a £1.2m property, they may not be bothered as much. But just pointing out this was the situation in this case.
Thats just a standard gifted deposit letter that they would request in all cases, irrespective of the amount.......As it made up the bulk of the deposit and 50%+ equity of the property, when asked where is the deposit money coming from (first time buyer) he declared the large gift.
The lender made it a condition that he instruct a solicitor to draw up documents signed by him and his parents to state the funds were a one way gift, no repayment will be made and no claim on the property.
Now this could be because of the nature of the gift provided so much equity in the property, that the lender was so nervous they wanted an iron clad contract as requested. If you are receiving a £50k gift and buying a £1.2m property, they may not be bothered as much. But just pointing out this was the situation in this case.
All covered here: https://www.natwest.com/mortgages/mortgage-guides/...
I imagine most big lenders will have similar policies.
OP you say you don't 'need' the money, but does it affect your LTV %?
You may be able to get a better deal if you now have a larger deposit thus a lower LTV.
Apologies if stating the obvious, you may well have considered this already.
I imagine most big lenders will have similar policies.
OP you say you don't 'need' the money, but does it affect your LTV %?
You may be able to get a better deal if you now have a larger deposit thus a lower LTV.
Apologies if stating the obvious, you may well have considered this already.
Sheepshanks said:
Sarnie said:
You will need to declare it to your lender and your solicitor. You will need to provide both with a signed letter from your father confirming that the funds are a gift, not repayable and he will hold no charge over the property etc....
What’s the detail behind this that would cause the lender to need to know? If the OP before was putting, say £50K towards the house and now he’s putting in £100K can he not just say it’s from savings?I gave both my kids money towards their first houses and I don’t recall any drama over it, although it was a few years ago now.
@OP - you could look at offset mortgages and then proceed with the purchase and put the 50k in the offset account which would get around the 'issue' of having to declare it to the lender. It would of course limit the mortgages available to you somewhat though.
Sheepshanks said:
What’s the detail behind this that would cause the lender to need to know? If the OP before was putting, say £50K towards the house and now he’s putting in £100K can he not just say it’s from savings?
I gave both my kids money towards their first houses and I don’t recall any drama over it, although it was a few years ago now.
It's an AML requirements, to evidence the full source of your deposit funds.I gave both my kids money towards their first houses and I don’t recall any drama over it, although it was a few years ago now.
It's not a drama, it's a simple letter.
Thanks for all of the answers.
The £50k does not make a huge difference to the overall LTV and does not constitute a significant chunk of the deposit/equity. I've mentioned it to my solicitor and our mortgage broker and will follow their advice. Our solicitors are quite an old school firm (exactly what you want from a solicitor - lots of wood in their offices and very dull, serious people) so I'm sure they can draft up a letter as required.
The £50k does not make a huge difference to the overall LTV and does not constitute a significant chunk of the deposit/equity. I've mentioned it to my solicitor and our mortgage broker and will follow their advice. Our solicitors are quite an old school firm (exactly what you want from a solicitor - lots of wood in their offices and very dull, serious people) so I'm sure they can draft up a letter as required.
As already said by others pretty standard practice for any Lender to give a couple of forms to fill out plus the Solicitor especially if a Mortgage is being taken out.
We had to fill out these when we gave No.1 son his house deposit but took 5 minutes and basically needs to say just a gift and not a loan etc.
We had to fill out these when we gave No.1 son his house deposit but took 5 minutes and basically needs to say just a gift and not a loan etc.
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