What is a “gifted deposit”?

A gifted mortgage deposit means that all or part of your deposit is given to you by someone else. It can come from a family member or a friend, although some mortgage lenders prefer to lend in these circumstances where the gifted deposits come from a family member which is something to bear in mind if you are buying property with a deposit gifted to you by someone who is not a member of your family. It is also important to note that if you are given the money for a deposit in the form of a loan, then it is not a “gift”. If you are required to repay the deposit at some unspecified point in the future, it is still considered a loan and not a gift. This is an important distinction because most solicitors will be acting for you and your mortgage lender on a purchase, so if you tell the lender it is a gift when, in fact, there is some obligation to repay at some point in the future, your solicitor will be obligated to explain this to the lender and it may result in the lender withdrawing your mortgage offer or confirming it is not prepared to proceed on the terms proposed.

What is required?

You must be able to provide a clear paper trail for the gifted funds. Both your mortgage lender and your solicitor need to be able to see clear evidence of where the money has come from and that it comes from a legitimate source (i.e. is not the proceeds of a crime). This is to ensure compliance with anti-money laundering regulations and professional regulatory requirements imposed on conveyancers – it is a legal requirement and, therefore, not optional or discretionary.

Your solicitor is therefore likely to ask the person gifting the deposit to you to confirm how they have accrued the funds that they are gifting to you. Below is a list of some of the potential ways in which your gifted deposit may have been accrued by the donor (this is a list of common reasons and is not exhaustive so if your circumstances do not fall within any of these exam

ples ask your solicitor what they will require). The donor(s) will be asked to provide appropriate documentary evidence for each of these along with copies of their identification documents:

1. Savings in an England & Wales bank account
2. 3 months bank statements from today’s date (downloaded from online banking is fine for England & Wales bank accounts)

1. Remortgage or Sale of a Property
2. Completion statement from a Solicitor or re-mortgage company, confirming that the monies are from a re-mortgage or a sale; and
3. 3 months bank statements from today’s date (as above downloaded from online banking is fine for England & Wales bank accounts).

3. Retirement or Redundancy
4. Letter from your employer, confirming that the monies are in relation to either early retirement or redundancy; and
5. 3 months bank statements from today’s date (as above downloaded from online banking is fine for England & Wales bank accounts).

4. ISA Premium
5. A Bond Certificate, if the monies are from an ISA or premium bond account; and
6. 3 months bank statements from today’s date (as above downloaded from online banking is fine for England & Wales bank accounts).

5. Inheritance
6. Letter from a Solicitor confirming the amount sent to you from the probate estate; and
7. 3 months bank statements from today’s date (as above downloaded from online banking is fine for England & Wales bank accounts).

In addition, it must be noted that if any of the money you are using to buy the property originates from  England & Wales then in addition you’ll need to provide:

• Notarised photocopy of each donor’s passport (certified to be a true copy of the original by a Notary Public)
• Proof of source of funds to include where the money has come from and 6 months of English translated bank statements showing the money in the account (further evidence may be requested if required to meet with the solicitor Money Laundering Procedures).

The residential property team at Colemans take these checks very seriously to keep our clients safe. We are open with you about what will be required from the outset so that there are no unpleasant surprises down the line. To find out more about what information you need to provide or indeed for any conveyancing enquiry, please do not hesitate to telephone our conveyancing expert, Sid Garg on 01628 631051 or email: sid.garg@colemans.co.uk

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This post was written by Colemans Solicitors LLP