Does a gifted deposit mean extra solicitor checks?
If you are receiving a gifted deposit, it is very important to tell your solicitor. A gifted deposit involves extra solicitor’s checks.
Your solicitor will request a ‘gifted deposit letter’ from the donor and they will do the following:
- Obtain proof of identity documents from the donor.
- Verify the source of gift deposit funds.
- Carry out anti-money laundering checks to comply with the Money Laundering Regulations 2017.
- Carry out a bankruptcy search on the donor before exchange of contracts.
Your solicitor will also confirm with your mortgage lender that you have received a gifted deposit.
Can you borrow money from your family to buy a house instead?
Borrowing money from your family is another way to buy a house. However, a loan will need to be declared to the mortgage lender as it is classed as a debt. The loan may affect whether you can get a mortgage, or it may limit the number of mortgage deals open to you.
If you borrow money, it is a good idea to draw up a loan agreement. The agreement will set out how and when the money is to be repaid, what happens if the lender needs the money back, or if somebody dies. Although it is tempting to rely on trust, having a loan agreement in place can save disagreements later and keep family relationships harmonious.
Our solicitors can advise you what to include in a loan agreement. We can help you to consider different scenarios, so everybody’s interests are protected whatever happens in life.