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Original poster

Gifted deposit

18 replies

mindutopia · 09/11/2021 14:03

Would anyone with any legal knowledge be able to point me in the direction of the definition of what constitutes a gifted deposit?

I have some money that was given to me by a family member several years ago, which I intend to use as part of our deposit. Dh and I also have significant savings that also make up the deposit. I discussed this with our mortgage advisor and he has said that if the funds were given years ago, were not given for the purpose of buying a house, and we have spent them and added too them (all of which is true), then it's not really a gifted deposit. I have asked our solicitor and even he wasn't entirely sure, so is having to do some extra research to find an answer for us.

The complicating factor is that in the time since I have become estranged from this family member (due to their own mental health issues and an unhealthy relationship). Sadly, despite my best efforts to support them and try to maintain a relationship, they no longer speak with me (or many of their friends either). It's been a tough few years (and that is a whole other thread - I've tried to hard to reach out, offer solutions, suggest sources of support, offer to talk about all that is going on, family counselling, speaking to friends, etc.). They don't even know unfortunately that we are buying this property, as they don't engage with any of my attempts to contact them (we live in different countries and COVID has meant travel is very restricted).

Anyway, I am hoping to find out what constitutes a gifted deposit. I want to make sure everything is done properly and there are no last minute surprises that we haven't ticked all the right boxes. It's obviously a delicate situation though and I really only want to reach out to them about the funds if I absolutely have to. I'm grateful they gave these to me, and it was certainly something they felt very strongly about doing at the time as they were very well off and wanted to share that, but I am concerned that reaching out may cause issues with their partner (who is an arsehat and I think has encouraged them to cut off family and friends). I just want to do the right thing, given the situation. Both for them and to make sure we don't get ourselves in a muddle.

OP posts:

peppersauce1984 · 09/11/2021 14:44

We had a gifted deposit for house purchase. When my solicitor and bank needed proof of it, they requested a letter from the giver and then a years copies of their bank statements. As your gift was given more than 1 year ago then like you've been advised I don't think it would be classed as a gift and would just be your savings.

Terribleluck · 09/11/2021 14:48

What @peppersauce said. I've bought two houses with gifted deposits, after a certain time they're classified as your own savings.

Mosky · 09/11/2021 14:58

We gifted a lump sum to our DC 3 years ago. When DS1 bought his house 2 years later it wasn't classed as a gifted deposit because it had been sitting in his bank for a couple of years.

TizerorFizz · 09/11/2021 14:58

We gifted DD a deposit. The mortgage co want to know the giver doesn’t want it back! We ckmfutned it was given and it was only 2 months before DD bought her flat. She didn’t use her own money at all. We sold a property to fund the deposit.

TizerorFizz · 09/11/2021 15:00

We confirmed it was given …..

AgentProvocateur · 09/11/2021 15:03

Sorry to butt in, but is a gifted deposit a good or a bad thing? I’m looking at giving a young relative a deposit, but I don’t want it to cause her issues.

catchyjem · 09/11/2021 15:22

When we used a gifted deposit we had to show where the money came from. It didn't matter how long ago it was, it mattered where the source was. If it's savings they need to see evidence of you saving the money, eg. Transfer from wages to savings account. They will go back years looking for this.

Batfinkwings · 09/11/2021 15:36

@AgentProvocateur a gifted deposit is a very good thing if you receive it like DH and I did!
It doesn't cause any complications, but the lender will want you to sign something saying it is a gift for your relative. And for money laundering checks they will also need to see a bank statement from you.
Our parents very generously gave us a large chunk of our deposit and this was all the lender needed from them. Nothing complicated at all.

TizerorFizz · 09/11/2021 15:45

Agreed. No issues here either. Our gift was a very sizeable chunk of money. The main issue is that it must be a gift. No strings attached. The “giver” cannot ask for interest to be paid on it or that it is returned to them in the future. So you must get it confirmed it’s not a loan or a temp arrangement. It must be truly given.

The mortgage Companies allow you to borrow on earnings and ability to pay. They also consider value to loan ratio so deposit matters. They don’t want anyone to be paying interest to relatives on the deposit, or even paying back the deposit. Once you’ve had the money for years though, the relative might have a tough time demanding it back or charging interest!

AgentProvocateur · 09/11/2021 15:46

@Batfinkwings thanks. That all makes sense.

SeekingSunshine1995 · 09/11/2021 16:08

We had a gifted deposit from my in-laws, they had to sign a letter stating it was a gifted deposit, how much, when it was given and confirming they wouldn’t be asking for it back or any interest to be paid for it it either.

Allsorts1 · 09/11/2021 16:21

I think it depends how much it is as well? So if you could have reasonably saved it based on your income they don’t check - but if you have a massive lump sum recently they would want to do money laundering checks. So maybe your lawyer has advised that because it’s been in your account for months and is within the realm of possibility that you have saved it yourself.

Allsorts1 · 09/11/2021 16:22

*years rather

Original poster

mindutopia · 09/11/2021 20:34

Thanks all, seems there is no consensus then. Mortgage advisor said that if we’ve had it more than a year, used it for other things and it wasn’t specifically given for a house, then it’s not a ‘gift deposit’. It just becomes savings.

I queried it with solicitor because I will obviously pull accounts back that far to show accumulation of funds. And I wanted to make sure the advice from mortgage advisor was correct. Also I just wanted to know if anything else could be considered a ‘gift’. Dh and I are savers, so we’ve had lots of gifts of money for birthdays and Christmases and from a family member when another distant family member has passed. That’s all gone in the pot (plus significant savings from our income too). I wanted to know if I also need to account for this money as a ‘gift’ and essentially where it ends.

The situation with this money is particularly tricky. The family member who gave it long talked about giving this money when they got older and simplified life and had a very good pension. So it was money freely given and with a lot of thought. But a lot has happened over time with their partner and they just are not the same person. In a normal circumstance, I would just get the gift letter and be done with it. But I do worry about rocking the boat for them and it’s probably better to lie low and not cause them to need to bring this up with the partner. There’s is also just the issue of not really having a way to easily contact them. I don’t even actually know where they live anymore as they moved house last year (and I’ve been told they likely moved again recently). It’s just such a tough situation that I’d rather avoid stirring the pot if I can. If I do get in touch with them, I’d prefer it not to have to be about money as my concern is more about their well-being and trying to get them some help. I’ll keep prodding our solicitor for an answer.

OP posts:

TizerorFizz · 09/11/2021 20:47

@mindutopia
Most of us did agree.

You are overthinking this. It’s no big deal. If you hadn’t said anything who would have known unless it’s a substantial amount? We gave DD in excess of £250,000. I think maybe your gift isn’t that big and you have already spent some of it so it’s not even given for the deposit! You should believe the mortgage adviser. It’s nothing to do with the solicitor. My DDs solicitor knew we gave her the money but the main issue is that you are not paying interest on it nor are you expected to repay it. DD is self employed and couldn’t have saved that amount of money so clearly it was given. If this money is within the realm of a standard deposit, and you could have saved it, you really should leave well alone.

purpleme12 · 09/11/2021 20:57

I recently bought a house.
With a gifted deposit
Mine was from a lump sum given about 3 years ago
And yes it still counted as gifted deposit for them
Because I had to show the source of it
So they had to answer all the usual questions confirming it was a gift and confirming where they got the money from

alwayswrighty · 09/11/2021 21:03

@mindutopia how much is it and how long ago was it gifted?

Londongent · 09/11/2021 21:22

The question as a pp pointed out is, is the gifted going to demand this money back? Would they have any legal recourse over it? Doesn't sound like it to me.
If they gave it some time ago and you have added to savings and potentially even spent some of those savings then as your mortgage advisor states this wouldn't be considered a gifted deposit

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