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

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We moved house again recently and there was absolutely no doubt in our minds who to use - we've used Winston solicitors for previous house moves and they were fantastic, as they proved to be yet again this time around. Leasa and Julie were our main points of contact, and were exceptional. We had a small chain but still some fairly complex issues to deal with and they handled it with ease. With all the stresses included in moving, it's great to know Winston were acting on our behalf because we knew we could trust them implicitly to handle everything with expertise. Cannot recommend highly enough!

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Excellent service throughout the whole process. My solicitor was very responsive and always happy to chase updates and keep things moving.As a first-time buyer, I particularly appreciated her guidance on what the seller should be responsible for providing and doing, and her attention to protecting my interests and rights throughout the transaction.She explained things clearly, kept me updated, and was proactive whenever there were issues or delays. I would definitely recommend her to anyone buying a property, especially first-time buyers.

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I used Winston’s for the purchase of my house and couldn’t be happier with the service I received. My solicitor was excellent throughout the entire process, incredibly efficient, professional, proactive and organised. Buying a house can be a very stressful experience, but their communication and attention to detail made the process feel much more manageable and reassuring.I would highly recommend Winston’s to anyone looking for a professional and reliable solicitor. Thank you for making what could have been a very stressful process considerably less stressful!

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