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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Megan

This team is really well organised, professional and thorough.My family have now used the Conveyancing service, both as Buyer and Seller, numerous times and have been extremely impressed and satisfied. They use simple and effective tools for great communication so you know the status at anytime and don't have to chase to find out. I would recommend Winston Solicitors without hesitation.

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I have just purchased my first property and used Winston Solicitors after being recommended by my Mortgage Advisor. I dealt with Samantha and Michelle who were amazing throughout the whole journey. They kept me informed of all steps throughout and responded to any queries in a timely manner. They also had an app where you could see progress and what the next steps would be which helped a lot for someone who didn’t know what to do. From putting my offer in to completed took around 8 weeks (no chain). Would highly recommend and I will definitely use them again in the future.

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Winston Solicitors have acted for me on many occasions for the conveyancing of property purchases and remortgages. I can't recommend Leasa Foster and her team enough. They make the transactions run very smoothly. They are clear with the information they provide to me, they are clear with the information they expect from me, and they are very thorough.

Sarah

Sidra is an exceptional solicitor who truly goes above and beyond! From the moment I instructed her, she was proactive, responsive, and incredibly knowledgeable. Her expertise and dedication ensured that my house purchase was handled with utmost care and efficiency. Sidra's professionalism, attention to detail, and friendly demeanor made a potentially stressful process remarkably smooth. I highly recommend Sidra to anyone in need of a reliable and skilled solicitor. Five stars isn't enough - she's truly outstanding!

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