The Bank of Mum & Dad
24 May 2018 by Joanne Millar
With ever growing disparity between increasing house prices and salaries, it is becoming increasingly difficult for first time buyers to step onto the housing ladder.
It is particularly difficult to save for a deposit if you have moved out of the family home and are living in rented accommodation with the expenses and outgoings that this brings.
More and more commonly parents or grandparents are “gifting” the deposit to their family members in order to help children/grandchildren purchase their first home.
It is important to bring any such gift to the attention of your legal representative at an early stage in order that they can report this to the Lender when a mortgage offer is received and authority to proceed obtained. It could well be that the mortgage broker who instigates the application has already advised the lender of the gift element but this is rarely reflected in the mortgage instructions received.
It is a requirement of conveyancers to obtain the ID of the donee of the gift and request source of funds for money laundering purposes. In addition, the donee would need to provide a letter from whomever is providing the gift to confirm that it is not repayable and they will have no interest in the property. This would then be forwarded to the lender when requesting authority to proceed. This is generally forthcoming as this information should have been provided by the broker before the offer is actually made.
It would seem that these days, children/grandchildren are receiving part/all of their inheritance sooner rather than later! When purchasing a property, it is important to be sure of the rules surrounding gifts. Our friendly conveyancing team are here to guide you, call 01206 704043 or email [email protected].