Buying your first house is always too time-consuming and the most challenging part when you think about saving sufficient money for making your deposit. Due to this reason, many parents or family members these days are now providing younger generations with part or full money that they may need for buying their first house.
Let us, therefore, try to know about gifted deposit mortgages UK in this post, and you may also get the help of Mortgage Experts Online, who are qualified to help you by offering their help and advice for any kind of mortgage.
What is a gifted deposit?
As per the tax law of the UK, no one can just give you money. A family member can, however, gift you as much as they would like. However, you must also be aware of any potential inheritance tax. In case the person dies within seven years after gifting you the money, then you may have to pay a certain amount as an inheritance tax on the money gifted to you.
Usually, your deposit is a minimum of 10% of a mortgage. Since the average house price in the UK is around £233,000, which means you must have a minimum amount of £24,000 available to pay your initial deposit. Here your gift money can be of immense help.
Any gifted deposit will mean you have been given money to fully cover the deposit amount. This is usually not considered a loan. Also, the person who is giving you the required money has got no stake in this property. This money is offered freely, with no expectation of repayment in the future.
What are the various rules to use any gifted deposit for the first-time buyer?
When you are using your gifted deposit, then you need to prove that the money that you received is a gift, that is, without any expectation of repayment. Usually, a gifted deposit letter will be good enough, and hence you must include the following:
- Your name
- The name who gifted
- The total sum received
- A statement to show it is a gift
- Also, a statement that this gift has got no commercial interest
- A letter of confirmation that this gift has no commercial, financial stake in the property
- Also, a confirmation that the person gifting you is financially solvent
This letter must also be signed by a certain witness too. This letter will be made into a legal document by your solicitor for mortgage lenders for consideration during your application.
The person offering the gift will have to prove that they have got the necessary funds to offer you too. Evidence like bank statements should do this. If your gifters have been saving for many years, then evidence of their regular deposits into their account can help with any anti-money laundering checks.
If this gift is your inheritance lump sum money, then you have to provide one copy of their will. The person who is offering the gift also must provide a photo ID and two forms of address proof.