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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To have no idea if I can borrow this money?

29 replies

Didntsaveadeposit · 16/07/2018 11:32

Have found my dream home and my mother has very kindly offered to lend me just shy of £20,000 to top up the deposit. However, I really can't believe that the government will let this pass without trying to tax it. Please can I ask if anyone has any experience in this?

OP posts:
dizzy174 · 16/07/2018 11:34

your mother maybe contacted by the mortgage provider wanting a signature that it is "gifted"

Confusedbeetle · 16/07/2018 11:35

Talk to an accountant re tax implications. I have given£ 15000, we had to make a declaration that it was a non re payable gift, and not a loan.

Typhers · 16/07/2018 11:35

It’s fine, just ask your mother kindly not to did in the next 7 years or you may be liable for inheritance tax.

AstrantiaMajor · 16/07/2018 11:35

I did similar amounts for all my children. I did it as a gift and the only time the taxman would have been involved is, if I had died within 7 years. If this is a loan then get a loan agreement drawn up with her.

Practically everyone I know helps with the house deposit either by gift or loan and no one has had any problems.

Typhers · 16/07/2018 11:36

Not to die ^ 😄

xyzandabc · 16/07/2018 11:36

If she's lending it to you, then I'm assuming you will be paying it back. No other loans are taxed, i.e bank loan, finance company loan, so this is no different.

If she is giving it to you rather than lending you need to check the yearly exemption amount she can gift to you, and inheritance laws if she were to die within 7 years then you would be liable to pay inheritance tax on a proportion of it.

Original poster
Didntsaveadeposit · 16/07/2018 11:37

Thank you! It's definitely a loan; I can afford to pay her back and she can't afford to part with it for good.

OP posts:
RiddleyW · 16/07/2018 11:38

It isn't taxable as a loan but it will affect the amount you can borrow from your bank as it counts as a commitment.

AstrantiaMajor · 16/07/2018 11:40

As fast as I am aware, mortgage provider does not need to know Unless your mum wants to take a charge over the property.

For my eldest son we took a charge on the property because he was going through some complicated legal procedures at the time.

Bluelady · 16/07/2018 11:43

Nobody needs to know. She just transfers the money to your account. Job done. It isn't affected by inheritance tax as it's a loan.

Original poster
Didntsaveadeposit · 16/07/2018 11:43

Our property agent said that a loan like this is noone's business but mine. Though of course she could say anything to convince me to sign!

OP posts:
user1487194234 · 16/07/2018 11:48

The mortgage company will want evidence that it is not a loan.
For IHT if your mother's estate is likely to be liable for IHT it is a Potential Exempt Transfer if she dies within 7 years

RiddleyW · 16/07/2018 11:48

I was asked specifically if some money from my parents was a loan or a gift and told I’d be able to borrow less if it was a loan. Obviously you can lie to the back about this if there’s no paperwork.

FullMetalRabbit · 16/07/2018 12:11

We lent money to step-son to buy his house and the solicitor drew up legal documents to specify it was a loan. She also registered our interest in the property with land registry, should he come to sell/remortgage - it was very straightforward and there were no tax implications

SometimesMaybe · 16/07/2018 12:15

Money Launderinrg Regs mean that your solicitor and mortgage provider need to know where all the money is coming from. It is highly likely that one or both will need to go through ML procedures (fairly painless and quick).
Loans won’t be subject to IHT but check your mortgage provider doesn’t reduce the amount they are prepared to offer as you have another commitment.

Speak to your solicitor to find out what the deal is.

sexnotgender · 16/07/2018 12:16

Some mortgage providers won't accept a loan as a deposit.

Whatiwishfor · 16/07/2018 12:17

I was going to borrow money of my mum for the same reason. Several mortgage companies said that she may have to sign a piece of paper to say that she had given it to me as a gift, none of them were bothered, i think its kind of normal now a days.
As it was it was a no goer but i think its pretty normal

missperegrinespeculiar · 16/07/2018 12:17

yes, bank will want to know if it is a loan and it will have an impact on the terms of your mortgage, if you can pass it as a gift it would be better for you, then you can still repay your mum of course!

wellBeehivedWoman · 16/07/2018 12:17

We did this! You don't need to pay tax on a loan but for the sake of your mortgage have her sign a letter indicating it's a gift - otherwise they will take it into consideration re how much you can borrow.

hiddenmnetter · 16/07/2018 12:17

Get it declared a gift or the bank will figure it into the affordability calculations which makes everything just more complicated. Then have a loan agreement written up between you. Much easier- the less the bank (and your lawyers) have to get involved the easier it is.

Normandy144 · 16/07/2018 12:26

Declare it as a gift and make arrangements to pay your mum back between the two of you. If you say it's a loan then as others have said your mortgage company will count it against you as an outgoing.

MyDcAreMarvel · 16/07/2018 12:30

Your mum will have to sign to say it’s a gift. If you subsequently choose to gift her £20k and pay her back privately in instalments that’s your business.

Sleephead1 · 16/07/2018 12:55

I'm not quiet sure that's true you have to prove where the money has come from we got given some money from my parents and they had to fill in paper work to say it was a gift so I think either your mum will have to say it's a gift or you will have to declare as a loan but will be taken into account as a outgoing

justme28 · 16/07/2018 14:18

As others have said, if it is a loan, not only may they take it into consideration when looking at how much you can borrow, but some mortgage companies will not give you a mortgage at all if the deposit is a loan (or at least not accept the loaned part).

Gifted deposits are acceptable but solicitors should get confirmation from the gifter that it is not repayable and that they will not have any interest in the property. Some also require proof of the deposit being accumulated, i.e bank statements.

trojanpony · 16/07/2018 14:35

She needs to gift it to you (you can repay her on the quiet)