Gifted funds

Buying a home with the help of your parents

First time buyers are finding the only way to jump onto the property ladder is with the help of “the Bank of Mum and Dad." Parents help out their children to buy their first home by way of giving them the funds. This may be considered an early heritance with money that would be coming their way in due course and parents are happy to pass it on to their children who need it.

What to expect when parents help buying your house
Proving source of funds for your house purchase

Call us on 0113 320 5000

What happens when you buy a house with the help of your parents?

When funds for a house purchase are gifted or loaned, the buyer’s conveyancer will need to carry out additional checks alongside the usual conveyancing process.

The extra checks when house purchase funds are gifted or loaned include:

EVIDENCE: asking for evidence of identity and proof of address in respect of each giftor.
PROOF: Asking for proof of funds and evidence of the source of the funds.
IDENTITY: Carrying out electronic identity checks in respect of each giftor.
SEARCHES: Carrying out bankruptcy searches in respect of each giftor.
CONFIRMATION: Asking for confirmation of the amount of the gift.
GIFT or LOAN: Asking for confirmation that it is a gift, that no part of the gift is repayable, that each giftor will have no stake in the property, and that no giftor will live at the property. We can assist you with a gifted deposit letter
LEGAL ADVICE: Recommending that each giftor obtains independent legal advice. This is particularly important because:
- Making a gift may have inheritance tax implications.
- A gift may not be the best option from the funder’s point of view. It may be preferable for the funder to secure a stake in the property by means of a Trust Deed or mortgage, protected by an entry on the register of title. This will ensure that the property cannot be sold without the funder’s consent, unless the mortgage lender repossess it.
COMMUNICATION: Referring the matter to any mortgage lender who is involved with the property purchase.

Proving source of funds for your conveyancing

It’s a legal requirement to prove where the funds come from when you buy a property. Conveyancers have a duty to guard against mortgage fraud and money laundering and must take steps to ensure that all funds used to purchase a property have been acquired in a legal way. If all the boxes are ticked and the conveyancers have no suspicions, lenders are normally happy to lend where gifted deposits are provided, but may be more reluctant where the funder wishes to claim a stake in the property.

You can find out more about Mortgage Gifted Deposits here

Call our conveyancing team on 0113 320 5000

A ‘giftor’ is the legal term given to the person giving the financial gift. Have a look at our legal glossary of conveyancing terms for further explanations of the terms used in the conveyancing process.

To discuss buying a property with the help of gifted or loaned funds please contact our experienced conveyancing team on 0113 320 5000 or email conveyancing@winstonsolicitors.co.uk

Client feedback

I'd just like to say a personal thank you to Joe for making what has been an incredibly stressful period of my life such a smooth transition and completed so quickly and efficiently. Every step of the process was explained clearly and the updates and communication throughout were exceptional. A pleasure to deal with, I couldn't recommend highly enough. Thank you Joe and thank you Winston Solicitors.

Kyle D., Bristol

Incredibly efficient and fast friendly service. Leasa and Julie were super helpful and proactive we didn’t have to chase once throughout the process. Will be recommending to anyone moving house! Thank you!

Anonymous, West Yorkshire

Your service is excellent! We would like to sincerely thank you for your professional guidance and support throughout the purchase of my property. Your clear communication, attention to detail, and efficiency made the entire process much smoother and less stressful for me. Your service helped us to opt for a good property. We sincerely appreciate the time and effort you dedicated throughout the process to ensure everything was handled properly and completed on time. As we have already recommended you to our friends, we will continue to do so in the future. Thank you again for your excellent service, and we look forward to working with you again in the future.

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Matthew

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David

Winston has helped us twice over the last 3 years: they work very efficiently, the portal they use is simple to navigate and keeps the client up to date, the team is easily contactable by phone. Many thanks to Leasa & Julie & the team, we'll maybe speak with you again in the future !

Susan