A gifted deposit is any amount that somebody (usually bank of mum or dad) gives a home buyer towards their deposit or gifts them the entire deposit.
More and more people are relying on gifted deposits to get a mortgage, but what does this mean for you?
Here at The Law Practice, we ask for proof of funds covering three months to see where the deposit is coming from and to ensure that this amount has been in your account for at least three months. During these three months, if we see that any significant amounts have gone into your account then we ask for a trail to be seen such as bank statements to show that an amount has been transferred from your savings account into your main account.
However, if this amount is a gift from anyone else then please note that Anti-Money Laundering laws require us to do the following:
A signed statement will be obtained from the gift donor: The purpose of this statement is to ensure that this amount is a non-repayable gift and the person has no interest in the property. This is directly sent to the gift donor once you provide us with their contact details.
A Bankruptcy Search will be carried on the gift donor: This will be done on completion and then £2.00 will be added to your bill.
Obtain certified photographic ID and proof of address from the gift donor.
An ID check on the gift donor: This will be £10.00 plus VAT and be completed as soon as the ID is received.
Obtain source of funds: This must show that the gift amount has been in their account for at least 3 months, if not then we must see a trail of where it came from.
At The Law Practice, for gifted deposits, there is a cost of £50.00 plus VAT for doing all the above work.
Different lenders have their own rules and requirements regarding the gifted deposit. We report this gift to the lender and ask them to confirm whether they are happy to proceed with the purchase. Some lenders also require their own statements to be completed by the gift donor. Therefore, if you are getting a gift towards your purchase please let us know as soon as possible so that we may carry out the above steps and allow the lender time to respond back to us in time for your transaction to not be delayed.
If you have any further questions, please do not hesitate to contact our conveyancing department on 0121 778 2371 or send us an email.