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Original poster

Gifting a mortgage deposit

16 replies

elljaycool · 05/05/2018 16:38

Just checking that if we gift our son a deposit for a house and then at some point in the future when he is better off, he decides to pay some of it back, does that matter to the lender?

OP posts:

namechangedtoday15 · 05/05/2018 16:50

Yes - any "pay back" means that's a loan and is relevant to a lender. If your son decides to gift you money (unconnected to the deposit) in the future that's different.

sausagedogsmakechipolatas · 05/05/2018 16:56

If the loan being paid back is compulsory then yes, as technically the mortgage company wouldn’t have the only financial interest in the house.

If it’s truly optional for him to gift cash to you at some hypothetical point in the future then no.

Caroian · 05/05/2018 17:17

As others have said, it cannot be seen to a loan that requires repayment. In fact, you may be required to provide a letter to your son's solicitor to confirm that you are gifting the deposit and that you will have no financial interest in the house. (The amount may also be relevant if you were to die within 7 years, as it will be treated as part of your estate for inheritance tax purposes, if that would apply).

There is then nothing to stop your son gifting you money back in the future as and when he is able.

ISeeTheLight · 05/05/2018 17:22

As above, you'll need to write a letter stating you are gifting X amount, it is a gift, in no way a loan, and will not be required to be paid back. You can Google sample letters.
You'll also need to show where the money has come from if they get a mortgage shortly after (anti-money laundering).

Sprinklesinmyelbow · 05/05/2018 17:24

It’s a gift so keep quiet about it. It’s no big deal though if you want him to pay it back in future- presumably he’ll be remortgaging in 3-5 years and your gift letter will no longer be valid.

You obviously know have no recompense to the money though? If he chooses to pay it back fine but you won’t have any way to make him

Eminybob · 05/05/2018 17:30

Depends on the lender I would imagine, but where I work it is considered a gift provided there is no interest charged and no monthly payment.
There may be a condition attached to the gift that it is to be repaid on sale of the property and that is acceptable.
So tbh if he gives it you back before selling the house if he has the money , as long as it is not a condition of the gift then it is likely to be fine.

BubblesBuddy · 05/05/2018 17:46

You can use it as a gift to offset inheritance tax on your estate. If you can live without it and your estate would pay IT, gift it. You then cannot have it repaid though.

Cheeseislife · 05/05/2018 21:48

Saw a sad face couple in the Daily Mail "gifted" their daughter 90k - when they asked how she planned to repay she basically laughed in their faces and they had no legal comeback

BrazzleDazzleDay · 05/05/2018 22:00

cheese read that too. I would hardly describe them as typical dm sad face, the daughter really fucked them over

HollowTalk · 05/05/2018 22:02

You might want to look at drawing up some agreement in case he lives there with someone else, so that he/she doesn't benefit from your loan.

12PurpleSnails · 05/05/2018 22:04

A relative helped us out with this, she signed to say it was a gift and we didn't need to pay it back but we did over the next three years. Mortgage provider never asked about it again once the mortgage was all completed.

Glaciferous · 05/05/2018 22:07

You don't have to gift it. You can have a charge against the house but also write a letter which the solicitor will draft saying that you do not expect repayments in current circumstances but that it is a loan. That way if circumstances change, your son could repay some of the money. This would protect your money eg if your son married and then divorced and the house had to be sold as your charge against the house would then be repaid to you on the sale of the house before the proceeds were split. My dad did this when he gave me and DH some money to buy a house. He later on gifted it to us and revoked his charge but he didn't have to do that. You should probably talk to a solicitor about this and see what arrangement would suit your family.

Sprinklesinmyelbow · 05/05/2018 22:08

Glaciferous that will turn most mortgage lenders off, particularly for a FTB.

Glaciferous · 05/05/2018 22:12

We were FTBs and it was fine.

Sprinklesinmyelbow · 05/05/2018 22:15

If it’s the deposit, that means the bank own 85% and the parents charge is 15% (obviously assuming a 15% deposit) this means should the bank need to repossess, from day 1 of ownership they’re not getting their 85% loan back. That makes it a poor option for them, when they have tonnes of people in simpler situations asking to borrow.

Glaciferous · 06/05/2018 08:53

For our lender, the main concern was just that repaying a loan would impact on our ability to pay for the actual mortgage. As my father stated that he wasn't expecting repayments, everything else went ahead smoothly. It's worth investigating. Our lender was Nationwide, if that helps the OP.

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