Buying a property with a gifted deposit

With the cost-of-living crisis that the country is currently going through, and the difficulties of getting on the property ladder, gifted deposits are becoming increasingly popular to assist those trying to purchase their first home. Even existing homeowners are increasingly buying a home with a gifted deposit.

Our expert conveyancers are here to assist with the procedure that you will need to go through when purchasing a property with a gifted deposit.

Lenders have become more relaxed when buying a home with a gifted deposit, but they rely on our expert conveyancers to comply with their requirements and to ensure that the relevant anti-money laundering checks have been undertaken.

Whether you are buying a home in Telford, Stafford or the wider Shropshire or Staffordshire area, the following checks will need to be carried out by our expert conveyancers when buying  a home with a gifted deposit:

1. Verification of the donor’s identification. This is usually done by way of an electronic ID check.
2. Verification of the donor’s source of funds and source of wealth. This will require evidence of where the gifted deposit funds are held and how the accrued. The evidence require may differ depending on the amount and the circumstances, but usually can be dealt with by bank statements and then evidence of income.
3. Obtaining written confirmation from the person providing the gifted deposit that the monies being provided are intended to be a gift and that they have no intention of residing at the property. This would need to be signed by both parties if the gifted deposit is coming from a joint account.
4. Bankruptcy searches carried out against the donor.
5. Dealing with specific lender requirements. For instance, some lenders require a donor to make a declaration of solvency.

When buying a home with a gifted deposit, there are also some other important points to note:

1. Some lenders will not accept gifts from friends or other none family members. The majority of lenders will only accepts gifts from immediately family members.
2. Some lenders will not accept gifts from outside the UK.
3. Most lenders will not accept ‘gifts’ where it is intended that the person gifting the money is to take an interest in the property or where the ‘gift’ is to be repaid on completion.
4. You may wish to consider whether a Declaration of Trust is appropriate to ensure that the gifted deposit amount is returned to the party to whom the gift was paid.

In light of the above, it is important that you check your proposed lender’s requirements when buying a home with a gifted deposit.

It may take some time to collate the relevant information so it is important that you let our expert conveyancers know as early as you can during the transaction that there you are buying a home with a gifted deposit so that they can contact the person providing the gifted deposit and obtain the information required above.

There are some lenders that require a gifted deposit to be reported to them and so the sooner our expert conveyancers are made aware of the gifted deposit the sooner we can let the lender know and deal with any additional requirements they may have.

I hope this helps to give you an overview of buying a property with a gifted deposit, but any enquiries please feel free to contact our expert conveyancing team.