Gifted deposit

[23BlackCoffee]

Hi

I wasn't sure if I should post this in legal, but hopefully someone can advise.

My mother gifted me £45,000 towards a house deposit nearly 2.5 years ago, but I haven't bought a house yet due to prices and interest rate rises. I was also unwell and out of work for a few months last year.

For a number of reasons (which I won't go into) we no longer speak and haven't done since May/June last year.

It's recently occurred to me that when I finally buy a house, I will be asked to provide a gifted deposit form and I have no idea how I will do this under these circumstances?

I don't have anything in writing from my mother to say it was a gift but as I said she gave me the money nearly 2.5 years ago.

I think - but I'm sure someone more educated on such matters will confirm - that given the fact these funds have been in your account for so long, you don't need to declare it. Is it not usual for it to be 6-12 months worth of funds they need explanation for?

You will have to show where it came from. Some companies want more detail than others. All you will need to show is that she paid it in to your account then, so statements from then, & where it has been since.

What proof they need depends on how thorough your solicitor is and the requirements of the lender. I know that Nationwide, for example, don't count it as a gifted deposit if it's been in your account for over a year. Others want to see the entire trail.

I think you will need to prove where the funds came from if we’re talking about a 45k chunk of money. Regardless of the fact it’s been in your account for 2.5 years, your solicitor will want to see where it has come from, especially if you’re not regularly getting such vast injections of money. (Like pp, I’m happy to be proven wrong.)

Thanks all

Think I might have to speak with a mortgage advisor and see if they can confirm this.

I have over recent years given my kids help with their deposits.
There were different requirements of what I had to write in my letter each time so it varies from lender to lender.
The basic narrative was
“I’m making a gift of £X to my son/daughter. I will not require the money to be repaid. I will not expect to have any financial interest in the property in exchange for my gift.”

One lender just required a standard letter as above but twice I have been asked to provide not only bank statements, to prove I have the funds, but also an audit trail to show how I came to have the money. I assume this is a money laundering check.

If you do need to identify the source of your funds, would your mother really not confirm this?
I was in a similar situation to you at the time we bought and were gifted money. Parents still did what they needed to do for our solicitor.

@PossumintheHouse I don't think so. We exchanged some not very nice words the last time we spoke and said we'd never speak again. I think she'd be awkward just to spite me if I'm honest, so I'd rather get around it if I can but appreciate that might not be my decision.

It will depend on both your mortgage lender & solicitor. We have done this a couple of times & have had to provide hugely differing amounts of information.

Sorry to jump on your thread. My parents are gifting me some money.Will they ask them for a paper trail?

They don't want to give it to me until as close as possible to completion but now sure if that's possible if they have to provide proof of where it's come from.

@BG2015 Your parents will need to provide your solicitor with a letter explaining the money is a gift and not a loan with the sort of wording suggested by @Missmillymollymandy

I also gifted my daughter a deposit and had to prove where the money came from as it was a large sum. I had gained equity via the sale of a property so provided the completion statement showing that a sum of x had been received by me when the property sold.

Sorry @23BlackCoffee I don’t know whether this would still be required if the money had been in my daughter’s account for 2 years already. I suspect not and it would just be accepted as part of her savings, but best to check with a mortgage broker.

Thanks for that, great help. 🙏🏻

You won’t be required to do a proof of funds for it. They will want 3 to 6 months of bank statements, so the amount will be showing in there for the entire time. You’ll be fine.

Honestly it will vary. We even had to provide a copy of a will & probate going back 10 years & where the money has been ever since.

I am a conveyancer.

At my firm we would require proof of how your mum accrued the funds - so a minimum of 6-12 months' bank statements for her current account and any other account the money has been (savings etc).

If it was a lump sum, received, for example, as an inheritance, we'd need to see proof of that, so letter from the solicitor handling the estate and the bank statement showing the payment coming into the account from the solicitor's account.

We'd also require your mum to complete an online biometric ID check to confirm that she is the person that made the gift and she'd need to complete our gifted deposit questionnaire and declaration.

My firm is very hot on AML and is perhaps more thorough than some others, but I would say there is no way you can use this gift (or any other money in the same account) without your mum having some level of involvement.

Unfortunately, this is incorrect. The law firm will need to know where all the money had come from, not just that there is enough in the account.

Due diligence requires that the firm can safely state that they are confident no part of the funds is as a result of proceeds of crime. Therefore they will need evidence of how op's mum funded the gift.

Well it certainly wasn’t for us. My other half’s mum gave her a decent sum about 8 months before we offered. She tucked it away in her savings account and they asked for the previous 6 months of bank statements. They didn’t question anything beyond that. We had a similar worry as their relationship has been rocky to say the least, however all went through without the need for any documentation.

For those who have had to prove years of bank statements, I imagine it’s due to the narrative of your case. If you’ve said something like it’s an inheritance or similar then yes, they might ask for proof. We just said it’s a savings account and my other half was paying in a couple of hundred a month to it anyway, so it perhaps looked a bit more above board. Can’t imagine the faff of having to provide ten years worth of bank statements!

Edit - just to say it was all above board and we’re not money launderers!

Definitely ask your mortgage advisor and solicitor. We had a gift and my father had to sign a form saying it was a gift (not a loan), his relationship to me, and how he had the money. The solicitor said they can ask the gifter to show evidence of how they saved the money, or if it was inheritance, the paperwork for that.

Although £45k is a generous gift, it's hardly of a level that would have any financial service questioning it if it's been in your account for 2.5 years. It could be nearer 3 years by the time you use it. Surely it could just be seen as normal savings. Do they really go into that sort of timeframe and detail?