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Original poster

My parents have given me money to pay off mortgage faster- is this legal?

40 replies

mortgagelife · 19/05/2022 16:24

So my parents have given me 70K so I can pay off my current mortgage a lot faster. Is this legal? I said I'd pay it back over the years and they said no to begin with but have now agreed. It's still a huge help as it means I won't have to pay any interest on it, like I would if it was still with the bank.

I am due to renew my mortgage this year and I am so grateful that my parents are in a position to help me, and want to help me, but is this going to be questioned? Will I/they need to declare anything?

OP posts:
Tippexy · 19/05/2022 21:06

Lavenderlast · 19/05/2022 17:07

Wrong

Show quote history

Absolutely not wrong. Have a google of gifted letters - these have to be signed by the family member who is doing the gifting. They have to sign to state that it is a gift, they have no claim on the property, there is no second charge and so on.

If it is a loan, and not a gift, then the VAST majority of lenders will steer clear.

Tippexy · 19/05/2022 21:08

Honestly it always blows my mind how people come on these threads and assert false information so confidently, when they clearly don't have a clue! Grin

CloudPop · 19/05/2022 21:10

Tippexy · 19/05/2022 21:08

Honestly it always blows my mind how people come on these threads and assert false information so confidently, when they clearly don't have a clue! Grin

Agree. Time after time

cleatwave · 19/05/2022 21:22

perimenofertility · 19/05/2022 16:53

My parents did something similar for me. They wrote a letter declaring that the money was a gift - the bank wanted to see this. I then paid my parents back over a period of a few years. We didn't consider it a loan, it was thought of more and family helping out family, as in, if I had decided not to pay them for whatever reason they would have had no legal claim on me - but both they and I knew I would pay back.

If this was a gift from your parents why did you need to pay it back?

SlightlyGeordieJohn · 19/05/2022 21:27

perimenofertility · 19/05/2022 16:53

My parents did something similar for me. They wrote a letter declaring that the money was a gift - the bank wanted to see this. I then paid my parents back over a period of a few years. We didn't consider it a loan, it was thought of more and family helping out family, as in, if I had decided not to pay them for whatever reason they would have had no legal claim on me - but both they and I knew I would pay back.

Maybe I’ve misunderstood, but that doesn’t sound right. If it was a gift, then why did you pay it back.

The way you’ve written makes it sound like it was a loan but that you told the bank that it was a gift.

TomatoorChips · 19/05/2022 21:32

perimenofertility · 19/05/2022 16:53

My parents did something similar for me. They wrote a letter declaring that the money was a gift - the bank wanted to see this. I then paid my parents back over a period of a few years. We didn't consider it a loan, it was thought of more and family helping out family, as in, if I had decided not to pay them for whatever reason they would have had no legal claim on me - but both they and I knew I would pay back.

So you committed mortgage fraud?

Onwards22 · 19/05/2022 21:36

I don’t have a mortgage so I’m not much help but I remember Martin lewis saying to beware of mortgage companies who charge you for paying off the mortgage early, so I’d definitely check this out first.

Sally090807 · 19/05/2022 21:52

madmay · 19/05/2022 17:04

Even if it were a gift, are there not rules about maximum amount able to be gifted every tax year? I had it in my mind that it was only about £3k

You can gift as much as you like but if the person who gifted you dies within 7 years that will be included in the estate.

Original poster
mortgagelife · 19/05/2022 22:38

Mia85 · 19/05/2022 21:00

Do you have siblings OP? If so it would be especially important to have a clear understanding of whether it is 'really' a gift or a loan as it's the kind of thing that can become very messy if there isn't clarity.

I have 2 siblings. We are a close family though and I really doubt we would ever have any issues surrounding money. We never have.

OP posts:
Original poster
mortgagelife · 19/05/2022 22:41

Thanks for everyone's responses. There are a lot of mixed views so kind of still confused haha.

It is definitely more of a gift than a loan, as I'll just be saving the money back up to gift back to them should they ever need it in the future. I won't be directly paying them back monthly or whatever. It'll just sit in my account for if they ever decide they need the money.

OP posts:
Tippexy · 19/05/2022 22:59

The point is that whether you want or agree to pay them back, your lender will need to have a gifted letter that shows that from their perspective, it is a gift. Would they be happy to do that?

Original poster
mortgagelife · 19/05/2022 23:01

Tippexy · 19/05/2022 22:59

The point is that whether you want or agree to pay them back, your lender will need to have a gifted letter that shows that from their perspective, it is a gift. Would they be happy to do that?

Luckily, yes they would. No doubt about it. Although they may moan a little about having to fill out paperwork haha.

OP posts:
SlightlyGeordieJohn · 19/05/2022 23:06

mortgagelife · 19/05/2022 22:41

Thanks for everyone's responses. There are a lot of mixed views so kind of still confused haha.

It is definitely more of a gift than a loan, as I'll just be saving the money back up to gift back to them should they ever need it in the future. I won't be directly paying them back monthly or whatever. It'll just sit in my account for if they ever decide they need the money.

You need to agree with them if it is a gift or a loan. Trying to play semantic games about which it is is not the right way to go.

If they gift it to you then why would you possibly “gift” it back?

TomatoorChips · 19/05/2022 23:09

mortgagelife · 19/05/2022 23:01

Luckily, yes they would. No doubt about it. Although they may moan a little about having to fill out paperwork haha.

Show quote history

They may also have to prove the source of the money ie where did they get it from

ancientgran · 19/05/2022 23:11

I gave some money to help with a deposit and the bank wanted a letter off me to say it was a gift. Yours is different as it is reducing the mortgage so it might be different.

When I paid of my mortgage when I got a lump sum I was asked where the money came from but they didn't check or ask for evidence.

I'm not sure how the loan would affect things rather than a gift.

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