Tips for buying a home with a gifted deposit as Bank of Mum and Dad digs deeper
The ‘Bank of Mum and Dad’ has become a common source of funding for homebuyers who are looking to get onto the property ladder.
A new report from Legal & General has suggested that the ‘Bank of Mum and Dad’ will lend nearly £7 billion to potential homes in 2019, an increase of 10% on 2018.
In the North West last year, the average funding from the ‘Bank of Mum and Dad’ almost doubled from £12,900 to more than £24,000.
If you are using money provided by family or friends to fund all or part of a deposit (known as a gifted deposit) there are a number of steps you will need to take. Without the right legal checks, a gift for all or part of your deposit can significantly slow down the purchase process.
So, we’ve put together the infographic below to with advice on how you can avoid unnecessary bumps in the road when purchasing a property with a gifted deposit.
Inform your conveyancer as soon as possible
As soon as your offer is accepted, it is important to inform your conveyancer that some or all of your deposit is a gift.
Your conveyancer will be required to carry out legal checks to comply with anti-money laundering rules. Providing information to your conveyancer early will avoid any delays which could affect potential completion dates.
Provide evidence the money was a gift and not a loan
Lenders will need written consent from the person giving the gift to confirm that the money is a true gift. They will also need to confirm that the person providing the gift does not have any legal interest in the property.
If your solicitor has been informed of the gift early in the process, they will ensure any paperwork required is signed and ready.
Ensure you have proof of Identification
In some cases, photocopies of ID will not be accepted so it is vital to ensure the person giving the gift will be available to provide proof of ID.
Prepare the necessary bank statements
Checking the bank statements of the person receiving the gift and the person giving the gift is an essential part of anti-money laundering checks. This allows a solicitor to confirm that the money has been earned legitimately.
Your solicitor can advise you whether you will simply need a single bank statement or more detailed evidence of how the money was accrued.
Understand the meaning of a gifted deposit
It is important for anyone contributing towards a gifted deposit to be aware that once the process is completed, they will no longer have any rights to either the money or the property.
Helen Robinson, Head of Conveyancing at Farnworth Rose Solicitors, comments: ‘Full or part gifted deposits are becoming increasingly common for those looking to get onto the property ladder.
‘Any gifted deposits need to undergo a series of checks and informing your conveyancer early is vital.
‘The specialist conveyancing team at Farnworth Rose Solicitors is available to offer the advice you need every step of the way. We’re here to make the process of purchasing a property with a gifted deposit as simple and hassle free as possible.”
Contact our specialist conveyancing solicitors in Lancashire today
If you’re buying a new home the specialist conveyancing solicitors at Farnworth Rose will be there to help you with all the legal aspects. We’re here to help your purchase run smoothly by ensuring you receive up to date advice on any information you may need to produce. For more information, click here to read how our specialist residential conveyancing solicitors can help you.
If you’d like to talk to our specialist team today, you can call us now on 01282 695 400.
Or simply click the button below to receive a free online conveyancing quote.