DD's first Mortgage

Thank you for all the useful information and ideas. We also found a good budgeting spreadsheet on the website of a certain famous Money Saving pundit's website, so DD can understand what expenses she has to budget for as well as the mortgage!!
Using a Credit Card to show you are reliable does seem back to front but is something we've been told elsewhere.
She's been saving into a Save to Buy ISA for the last 9 months so hopefully that will stand her in good stead.
Making sure she's protected if she is joined in the house by her boyfriend is good advice and something I plan to look at more closely. (Although DD is determined that the house will be in her name only). Once again - thanks everyone ... it's good to know I'm not alone!

My son told by his independent mortgage broker that he needed to set up a credit card and use it (he pays it off in full every month) to be able to provide a credit rating. He also had to show last three months bank statements when applying for mortgage.

It was the Lloyds helping hand we are hoping to use. They told us that our niece needed a credit history, pay slips were not enough on their own.

I’m helping with a mortgage for my son with around £20,000 deposit
This is with Lloyd’s it’s call helping hand I think and In three years time I get the deposit back plus 2.5% interest
I was told by the lady that he only needs one wage slip
He had only been in his current job six months and that was ok too
Hope this helps

I wish people would be accurate about the 7 year rule for IHT. If you both die within 7 years of making the gift, whether any IHT is payable will be calculated on the net estate including the money gifted but the tax due on the money gifted if the net estate is over the IHT tax free allowance will reduce on a sliding scale ( as already said). That shouldn’t be a consideration anyway because helping your dd now onto the property ladder is worth far more to her now than money when you’re both dead. We are 5 years into our 7 years now with dd’s deposit and have our fingers crossed?

We didn't have to say where the money came from. We just put it in my C's accounts. Obviously it came from legitimate savings but they were not asked where their deposit had come from so no-one knew we had provided it.

If you help with a deposit you'll probably be asked to show where the money's come from, and may well have to certify that it's a gift, not a loan.
At least, that's what we had to do when helping dds.

As I understand it, as long as you live for 7 years after making such a gift, there are no tax implications.

I hope it all goes well for your dd.

You might want to explore the new "lend a hand" mortgage from Lloyds www.lloydsbank.com/mortgages/first-time-buyers/lend-a-hand.asp

We are just looking into this for my niece. Your daughter will need a credit history; for example a mobile phone contract, a credit card (!!!) to show that she can repay debt and to be registered as a voter.
I was astonished, thinking of posting separately. Once we used to have to prove we could save up for 6 months with a building society. Now we have to have debt on a credit card to prove we can manage it.
We have gifted money to our sons to put in their deposit savings. It is just in their savings accounts now. You are allowed to gift up to a certain amount each year - after that it might form part of your estate if you die depending on the size of your estate. HMRC website has the details. Like others have said, it reduces on a 7 year sliding scale if you gift over the amount.

Unless you are giving the money outright take legal advice. If you have any interest in the house at all you could be liable for capital gains tax when it is sold.
We gave both our children deposits more than 7 years ago with no strings and no problems. My son bought with his then girlfriend (now wife) and had an agreement drawn up that if it was sold he would get the whole deposit back. He had been stung before.
Advice about the ISA is good and worth looking into.

There may not even be any tax liability as I said upthread and if there were it woukd only kick in after the second parent died anyway. There’s a lot of repitition on this thread

The tax liability lessens pro rata as the 7 years go by.

I believe there is no partner here and the op is talking about a gift not a loan.

I understand the desire to help but please take legal advice. We lent my son a very large deposit but took a second charge on the property. That way we were protected. There are lots of other ways to safeguard yourself against future problems. The money spent on legal advice can save you thousands. Quite a few people I know have seen their child’s relationship break up and the partner walk away with a large sum even though they never contributed anything other than half the mortgage.

There will be no tax implications to your gift of money for the deposit, as long as you or your husband live for the next 7 years.

If it was me, I would help her to get her foot on the housing ladder and I would imagine her mortgage payments will be less than the rent she would pay, in the same area, so win win really.

I suggest she opens an ISA immediately to save for a deposit. Only for first time buyers but will be discontinued (as far as opening goes) in December.

Interest rates are generally better.
If she saves a minimum of £1600 she'll be entitled to a 25% bonus. This bonus can't be counted as part of the deposit so she should establish a good record of regular monthly saving, as a well as providing evidence of earnings. The bonus cash can of course be used for fees, expenses etc.

My GD and I looked into this very recently and Virgin offered 2.5%. She is now happily saving to buy her first flat in a couple of years.

Well worth looking on line!

There may be a tax liability not will be if you both died with in 7 years - it would depend on the total size of the estate.

I think the mortgage company require 3 months salary check and affordability checks. All changed since our days of mortgages!
Re money for deposit, gifts from parents require a letter stating that they are a gift so that there’s no claim on the property by the person giving the money.
As regards the tax situation, there is a tax liability on the recipient if the gifted dies within 7 years, although this is on a diminishing sliding scale.
We have gifted money to our DCs for deposits and there were no difficulties.