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Original poster

Gifted deposit - help!

22 replies

UnrulyPig · 28/02/2021 16:00

I hope someone will be able to help us with our maybe slightly unusual FTB situation?

I am in the very fortunate position of buying with the help of a gifted deposit from family. However, the money won't be available until their house sale has completed. They have sold to a developer who is demolishing the house to build flats; planning has now been approved and they are now in the position of negotiating a 'move out' date so the house can be demolished.

My understanding is that on their 'move out' date, the money will be transferred to my family member from the developer, and then my family member will be able to transfer the agreed deposit sum to me.

I realise this means that I won't be able to exchange on any property until after that date, because obviously I won't have the deposit money. However what does this mean for my ability to make an offer on a house in the first place? I assume I would have to show proof of deposit to make an offer? Would an estate agent accept eg: a letter from my family member, or would it have to come from the developer themselves?

I have an agreement in principle but it's based on the assumption that I will have £X as a gifted deposit, which I don't actually have in my account yet.

Sorry for the silly questions but any help or advice would be great!

OP posts:

LawnFever · 28/02/2021 16:03

I’ve never been asked for proof of deposit, most people’s deposit is tied into the sale of their own house, much as yours is tied into your families sale.

You can still make an offer based on your agreement in principle.

beckyyl · 28/02/2021 16:06

I had to show proof of deposit for my first house, and a small amount of it was gifted which took a while for them to approve and confirm where it was from etc.

I can't say this for certain it's just my view but I would've thought that in order for them to confirm a mortgage offer they will need you to have that gifted deposit in your bank ready to provide proof of and the person who's gifted it will also have to sign documents.

You can make an offer on a house with an AIP though, you just won't be able to get to exchange or anything without a formal mortgage offer

GenderApostate19 · 28/02/2021 16:06

We gave the Estate agent a letter stating we were gifting DD and her partner half of their deposit.
For the solicitors, we provided a letter and proof of the funds (investment statement).
When the money hits our account, should be this week, we will send proof to them, transfer to DD then she will do the same - there has to be a clear trail of where the money has come from due to money laundering regs.

GenderApostate19 · 28/02/2021 16:08

We also had to fill in a gifted deposit form for Nationwide - they didn’t need proof, that’s down to the Solicitor.

Original poster

UnrulyPig · 28/02/2021 16:13

I knew that a letter / signed form about the gift would be required for the actual mortgage application once we find somewhere, but I was more worried about it affecting my ability to make an offer in the first place. That's useful though @GenderApostate19 to know that you provided a letter for the EA.

OP posts:

PurBal · 28/02/2021 16:14

I had to show proof of funds as we used some of my inheritance to boost our purchasing power. My understanding is the money needs to be in your account before exchange, it can't be in someone else's. Then there needs to be an accompanying paperwork to say where it's from (in my case it was a copy of the Will, I think for gifts a letter would suffice).

PurBal · 28/02/2021 16:16

Meant to add, I agree with PP. You don't need to have the money in your account to view properties. That's all part of the legal process at conveyancing. Having a mortgage broker really helped buffer questions, one less thing to worry about as they did it all for us.

PurBal · 28/02/2021 16:17

To clarify, any questions about our affordability from EA were dealt with by the broker. So we would just give the broker's contact details to the EA.

mummabubs · 28/02/2021 16:22

I was in a similar situation to you OP and pretty sure we didn't have to show proof of deposit until after we'd made an offer on our house. (Might be agent-specific though as we've just sold our house to FTBs and our agent wouldn't take our house off the market or formally mark us as accepting their offer before they'd sent proof of deposit). Can you get a letter from your parents certified by someone to state they will be providing the deposit?

Onjnmoeiejducwoapy · 28/02/2021 16:42

I’m in the exact same situation and currently have an offer accepted. It’s fine, the cash only needs to be in your hand later down the line. Bank won’t ask to see your deposit now. Have put my full mortgage application in and they didn’t want to see it then. Just tell the estate agent

FenceSplinters · 28/02/2021 16:48

The person gifting you a deposit will have to prove that they have the funds available before you can make an offer.

Original poster

UnrulyPig · 28/02/2021 16:48

That's all really reassuring, thank you! Just worried that we won't be taken seriously by EAs / vendors for offer-making purposes but it's good to hear stories from people on similar situations.

Need to get cracking with the house viewings now!

OP posts:

Onjnmoeiejducwoapy · 28/02/2021 16:53

Get your agreement in principle and speak to a broker. You’re basically in a chain, there is no problem there. Estate agents will be fine with you as long as you have a timeline for the sale.

purplemunkey · 28/02/2021 16:58

Yes, I had a gifted deposit for my first house. My family never had to provide proof of funds. This was once we had had an offer accepted and things started moving though. I’d bear that in mind - if you get to the point of making an offer and starting the process you may need the proof

purplemunkey · 28/02/2021 16:59

Sorry, pretty key autocorrect there! My family member had to provide proof of funds. This was once the offer had been accepted and the purchase process had started.

Elieza · 28/02/2021 20:31

I thought you needed an agreement in principal from the mortgage provider. I doubt they’d give you that based on a promise without the money in your name? Something unexpected could happen like the developer goes bust and the sale falls through or whatever.

It could be that you get an agreement in principal based on your own earnings which makes the monthly repayments look massive but you know that won’t be the deal you ultimately proceed with so it’s fine? It just shows the seller that you can proceed? Even though you know your circs will change.

You will be in a stronger position once you are not in a chain, which you kinda are.

Original poster

UnrulyPig · 28/02/2021 21:59

I do have an agreement in principle, from a whole-of-market broker.

I take your point about 'something unexpected' but surely that's the case with any AIP (or indeed any house sale)? They don't check your bank statements at that point so to an extent anyone could say anything.

I don't think the developer is going to go bust in the next 4 months and if they do, well, then it's all moot really isn't it? I won't be moving anywhere!

OP posts:

cabbageking · 28/02/2021 22:27

It would be fair to have a time frame. The seller may not be in a rush but they need a reasonable time frame to make a decision on accepting an offer. The EA should question you about the reliability of any offer and inform the buyer.

You do need to evidence where the money comes from and that the gift is a gift with our any comeback on the house. They will need to evidence where they got the money from too. This complies with money laundering requirements.

overwork · 28/02/2021 22:41

I did similar a few years ago, my gifted deposit was dependent on the sale of another asset. I assumed wasn't asked for proof as it really went down to the wire, that sale only happened the week before I exchanged.

Bells3032 · 01/03/2021 00:23

Bought twice with gifted deposits - never mentioned this to agents just said have a good ltv. Never even got asked for an aip to be honest as nothing is checked for them you can make up rubbish.

We were asked for evidence by both the mortgage broker and the lawyer though pretty much straight away so if its gonna be a while id hold off.

LawnFever · 01/03/2021 05:33

You don’t need to show anything to get an agreement in principle, it’s based on what you tell the mortgage broker. You only start needing to prove salary, where deposit is coming from etc once your offer has been accepted and the formal mortgage offer is requested.

yearinyearout · 01/03/2021 05:55

We are gifting a deposit to Dd who's a FTB, and have had to supply not only a letter stating that, but also proof of our funds, before she could make an offer.

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