Can I get a gifted family deposit mortgage?
Yes, you can get a gifted family deposit mortgage but you may need to contact a financial adviser.
What are the implications of inheritance tax of gifted family deposit mortgages?
The biggest risk for gifted deposit mortgages is potential inheritance tax. If the person gifting were to die within the seven-year inheritance tax period and if the estate was larger than the inheritance tax nil-rate band at that time then IHT could become payable on the gift.
The person gifting can gift a small amount each year which is outside of the estate for IHT purposes. This is called the annual gift allowance or tax-free gift allowance. However, if gift deposits are more than this then potentially the gift could be subject to inheritance tax.
What proof is needed for deposits from family members?
When you apply for a mortgage then the broker, lender and solicitor will require proof of the deposit. What is needed for each will be similar but not always the same as solicitors and brokers sometimes have their own anti-money laundering checks within their own companies and they put in place what they feel comfortable with. Some of the items requested will include:
- bank statements
- gifted deposit letter template
- proof of address
- Sometimes lenders have their own gift deposit forms
Where the funds are not from conventional sources such as the gift-giver’s bank account
and instead will come from a property transaction, a pension to gift, sale of an asset, sale of shares or sale of a car the again expert guidance from a broker will be helpful. As long as the gift is a legitimate gift then the proof needed should be available. We can tell you exactly what proof will be needed on your case once we have discussed your situation in more detail.
Anti-money laundering regulations are not there to prevent you from applying but the source of deposit needs to be clear and if the gift is genuine and of a legitimate source then it is usually straightforward.
