Told I can’t use this premium bonds money for our house deposit as it’s illegal?

[kiav]

We have two premium bonds accounts. One is in my name and one is in DD’s name. We have 50k in mine and 30k in DD’s.

we are now in a position to buy a home. We will need the 50k for a deposit and we also need the 30k for things like stamp duty, new sofa, to do a small bit of work that needs doing in the downstairs etc.

I have been told by a friend it’s illegal to use Dd’s 30k for this? This is money we have saved from our income but now our circumstances have changed we need it. Surely premium bonds should tell you this before you invest??

You are absolutely incorrect. I work in the industry, there are stringent anti money laundering regulations and source of funds are thoroughly checked. There are potential legal issues which could make a lender wary, it will depend on the lender and needs to be checked out.

The mortgage lender will want to know the source of your deposit in case there is someone else who could have an interest in the property. When I gave my son some money to add to his deposit I had to sign a letter declaring it was an outright gift and I would never want the money back.
Cash in the bonds, add to your account and tell them your deposit came from savings, which it did.

Yeah, you can't just transfer funds from one account to another and make it all go away. The conveyancing solicitor will won't to see proof of the origin of funds to comply with money laundering regulations.

OP, you need to speak to your solicitor and check that this is okay legally. It's a grey area and most people here are just speculating.

Its her dds money though, its in her dds name

I think buying a house will benefit her daughter , don't you?

I didn't say strident checks aren't in place, I said they won't care if it was withdrawn from underage children's savings. Regardless, she's not even using it for the deposit – she's using it as stamp duty and home improvement, which has nothing to do with the lender.

The OP has the deposit covered via the Premium Bonds held in their own name and the other account will be used to pay the Stamp Duty and furnish the home. The mortgage company are completely irrelevant to this scenario and, besides, I think you're scaremongering.

We have the max in mine my husband and daughters name. Under 18 you can take it out. I mean I can’t see us doing that in the short to medium term but it is possible.

Technically you can remove the money. I have taken money out of ds’ (for ds to use)

However the bank is going to want to want to know where the £30k has come from and possibly the solicitors.

Let’s be honest, you put it in there for a reason. You viewed it as your money but put it in her name. I assume for tax reasons?

You basically tried to play the system. You had access to 80k of premium bonds when you should only have 50k. And have been accepting the winnings from her account. Why wouldn’t you just have her winnings reinvested in her own premium bonds? Because you didn’t really view them as hers?

Have you being spending her winnings?

You’re wrong though, there’s also an onus on the solicitor to verify proof of funds including where money for legal fees/stamp duty money is coming from. The checks will show this being transferred from an account in a child’s name who legally cannot consent and as I said, this may cause issues. Both the bank and the solicitor have a legal duty to very much care where the money comes from. Like I said, I work in the industry so I do know what I’m talking about here 😂.

I did this last year. I had to cash the Premium Bonds in advance so that the money appeared in my bank account as evidence of funds. Then I had to provide evidence of the premium bond sale. It took some tooing and fro-ing but it wasn't illegal!

They have to do thorough anti money laundering checks.

I’m sure the daughter will benefit from the new home…

The child does not need to consent. Any money 'owned' by her is free to be controlled by her parents.

You're scaremongering.

See later post. As I said, I work in the industry. I’m not saying it won’t be possible, but it might cause problems and is definitely worth checking with the solicitor/lender before the OP gets deep into the sales process.

No, if it’s in the child’s name it’s legally owned by the child. The parents have “control” but the child could later argue the money was “taken” from them. Legally very complicated and unlikely to happen but there is a small risk and this can make solicitors and lenders wary.

It’s not scaremongering to suggest a legal situation is thoroughly checked out with the relevant people, its basic common sense. Shocking really that people are willing to just take a chance and not do their due diligence.

This is mental! It’s your money you put it in and stored it under her name, now you need to use it for a home for her to live in ffs! Withdraw the money and buy your house for goodness sake, it’s nobodies business and you shouldn’t have told your friend in the first place! This is why you keep your finances to yourself. If she was 17 and you were using it to gamble I’d see the point about morals but she’s a baby and you are buying a home, stop thinking about it and do not discuss it any further with anyone else.

This. She's under 18 so I don't suppose it can be solely in her name anyway.

The reason it can be an issue (I assume) is if people are putting money into children's accounts to avoid paying tax on it. You haven't been doing this so no problem.

It's her money so yes that's correct you can't use it.

Why didn't you just open another savings account if it wasn't intended for her?

Would be interesting to know how you think a 5 year old would know about any of this to remember for decade(s) to then take offence and have a tantrum about the money her mum earned and used to buy the family home? 🤔 absolutely madness

The limit for Premium Bonds per person is £50k

This is the flipside of using your Dds name to get more PBs than allowed per person.

I didn't say it wasn't owned by the child – I said that the parents can freely withdraw it. Which they can.

It is scaremongering since it is over-egging an unlikely scenario. I've known a good few people who have done this for house deposits. Never raised a flag.

There is no need to check anything with the lender. The source of the deposit is the OP's own account. That's the end of the mortgage company's concern.

Parents are free to manage their children's money however they see fit l. That's why things like trusts exist - i.e. to prevent parents spending children's inheritance, etc.

This money is not in a trust and the of parents can sell the bonds and transfer the money to the nominated account, which is presumably the parent's account.

All that will show on the bank statement is a transfer into NS&I when the bonds were purchased and a transfer out again.

NS&I are obviously considered to be a 'safe' source of funds by money laundering standards.

Take the £50k out, buy the house, and then use what you need from the £30k after completion.

You will need to cover the house buying costs another way until you can withdraw the other pot of money.

They absolutely have been doing that!

The OP has maxed out her limit for PBs (£50k) and instead of putting £30k in a high interest savings account which would be taxed, has put it in her Dds name in PBs where winnings are not taxed.

If the 5 year old ever decides to get premium bonds they will find out.

its not being used to buy the family home is it? It’s for some work and a sofa.

The child’s isn’t responsible for enabling Op to buy things for a house.

The Op has been on a position to save 30k over 5 years. But now as ‘our situation has changed’ is the time to buy a home the op and partner can’t afford using their own money?