5 tips on giving or receiving a gifted deposit
Q. What is a
gifted deposit?
A. It's a sum of money given to you by a third party as a deposit on a property.
Saving for a deposit for your first home can take time and there is now a growing trend for ‘the bank of mum and dad’, family members and friends to help perspective buyers raise a deposit by gifting them the money to put down on a new property.
According to My Home Move, the UK’s leading provider of mover conveyancing services, 8% of residential transactions between November 2015 and October 2016 included a gifted deposit – up from 6.5% compared over the previous twelve months.
If you are lucky enough to be in a position where a gifted deposit is a possibility, either giving or receiving, read these top tips to ensure you are fully aware of the implications and how this may affect your situation.
1. Inform
your conveyancer – as soon as you have your offer accepted on your new home,
ensure you inform your conveyancer so they are aware that some or all of the
deposit is a gift.
2. Be aware that you will need to provide evidence that the money was a gift
not a loan. The lenders will need written consent confirming the money was a
gift and that the provider will have no personal interest in the property.
3. Be
organised and check with your solicitor what documentation and proof of
identification will be required as quite often photocopies will not be
accepted. Being prepared at an early stage will mean you won’t delay any
paperwork and hold up the buying process at a later date.
4. Your
mortgage lender will carry out anti-money laundering checks, and they will need
to see and check the necessary bank statements both from the person giving the
money and the recipient to confirm the money was earned legitimately. Have all
the statements at the ready to ensure a smooth process.
5. It’s really important for both parties to understand what a gifted deposit
means to them and how it may affect relationships going forward. If you are the
contributor of a gifted deposit it is important to fully understand that once
the process is completed you will have no rights to the money or the property.
If you have
any questions or require any further information on gifted deposits or any
other property related matters, please don’t hesitate to contact one of our
knowledgeable team on askhenry@henryadams.co.uk
