Give or loan towards DD’s down payment?

I was left an inheritance from my grandmother back in the 1970s and there were none of these ridiculous money laundering or other regulations in place then.

Greta8: we just had to provide evidence of the source of funds to a solicitor and provide a letter saying it was a loan not a gift.

I think you menat to say "a gift not a loan"

Like most couples, they will probably have got the biggest loan they can afford and it would be assumed that they wouldn't be able to pay back another loan.

Solicitors are concerned about money laundering so always wish to see evidence of the source of the loan, including ID and bank statements from the donors.

mokryna, If you have the spare money it is best given as an outright gift. We gifted our youngest daughter a substantial deposit when we moved house to a different part of the country. Her work was in London and, in effect, we were making her homeless. Her other sisters already had their own homes and received minimum help from us. We just hadn't that sort of spare cash then. We discussed it with them and said they would get their share of the sale when we died. They were happy with that. Our youngest didn't have a partner, so no second income and we wanted her to have a relatively small mortgage she could manage alone. Germanshepherdsmum is correct when she says they will do strict checks on where the money comes from and if it is a gift or loan. We had to confirm for the mortgage company that is was an outright gift. This is because the mortgage company always has first call if they renege on payments or go bankrupt and the house has to be repossessed and sold.
As an aside, the £3000 a year you can give as a gift free of IT must come out of general income and not savings. Some weird HMRC condition.

dogsmother

Primrose.
We only give what will become theirs, my children have been invested in since birth. I’m not wealthy nor are they indulged. They have been state educated and lucky depending on your view to have the option of 11+. We paid for football, dance swimming or whatever the preference was. When 17 we paid for driving lessons to further equip adult basics ( in our view ).
They are lucky, so much luckier than we were but also appreciative and that makes me happy. We are all close.

I’m not disagreeing with you, I’m saying they are very lucky! It’s up to individual families what they do. My late FIL never gave us anything although he was very well off because he said nobody helped him and people should learn to stand on their own feet.

There’s a young couple living behind us who have recently bought a very nice 3 bed semi. She works in a care home and he works in retail so there is no way they are buying that without help on those sort of wages.

Her parents are there all the time helping out with decorating, gardening, putting fences up, cleaning windows etc. they do much more than the children!! 🤣🤣

It’s apparently a bridging loan wyllow. No taxes but best for both of you to properly document the amount loaned and when it is to be repaid. Your sister would be advised to place a charge on your house to secure her position - solicitor dealing with purchase will advise.

Primrose.
We only give what will become theirs, my children have been invested in since birth. I’m not wealthy nor are they indulged. They have been state educated and lucky depending on your view to have the option of 11+. We paid for football, dance swimming or whatever the preference was. When 17 we paid for driving lessons to further equip adult basics ( in our view ).
They are lucky, so much luckier than we were but also appreciative and that makes me happy. We are all close.

Primrose53

I've not been able to help out DS and family but DiL's gran passed away and her parents didn't need the money, its a true blessing they were able to nearly buy their house outright.
I felt so grateful.

I hear you. GSM and dogsmother.

Better a loan in terms of vague and family relationships, but won't it incur fees and taxes and so on? (sorry so ignorant!)
I do realise that I will have to pay stamp duty on "Second home" until I can recoup the money, but its not a lot.

My gosh, all these very lucky children getting deposits for houses etc. we got absolutely nothing when we got married. Husband’s parents could easily afford to help out but didn’t believe in it and my parents couldn’t afford to but helped out in practical ways instead.

Wyllow, all genuine gifts and loan’s purely between whichever of offspring who each very well able to cover later loans. So nothing in particular to be gained. Just lack of charges.

Marydoll

No. We put it in their bank account, the bank checked the source. It was deemed a gift. They were all getting married when we did it.

We didn’t involve lawyers either - not necessary.
Dd1 and SiL were about to get married and had very recently had their first baby when they bought the house* we helped with.
I was very much aware at the time that if they ever split up, there was no way according to U.K. law to ensure that our substantial gift of money would stay with dd. But we really liked our soon-to-be SiL (still do 8 years later) and I couldn’t possibly have brought myself to get him to sign any informal agreement to say he wouldn’t claim any of that money.

*their 2nd house - they had declined any help with the first. Ironically, if they’d accepted help and bought something a bit pricier first time around, the price difference between 1 and 2 would have been considerably less - prices had all shot up within just a very few years.

If my DD suffers a divorce will she be able to recuperate the equivalent from a gift or would it be better a loan?

mokryna, if the money is to be treated as an advance on your daughter’s inheritance, either by a gift now or a loan which if still outstanding on your death ceases to be repayable, that should be clearly set out in your will.
Wyllow, don’t try to dress up a loan as a gift or vice versa. It needs to be properly documented rather than ‘a private arrangement’ for both your sakes.

We did that for one DD and not for the other (didn' need it)- it was all clear and in the open, and declared to be deducted from the one DD after our demise, in our notarised Will.

Our two children were married over 30 years ago and we gave them both deposits on their first homes.
At that time there were no questions asked as to where they got it from or none asked as to why we were giving it.
Rules have changed considerably since those times.
I would just say that with today’s house prices the sums will be much greater than we gifted and as both my children’s marriages have ended perhaps some recognition of the gift to one’s own child should re registered.

When I say downpayment, I mean outright all the cost. (its cheaper up here than places further south!)

May I hop on board for similar question?

My sister may be able to loan me the money for a downpayment on a flat, meaning I have less stress in selling my house.

but it seems to me on reading the above it would be better if it were presented as a gift, and private arrangements made?

To the O/P - a gift, lovely.

We gifted a house deposit to our daughter and son-in-law. It's a very straightforward process, we just had to provide evidence of the source of funds to a solicitor and provide a letter saying it was a loan not a gift. A fact about someone I know who decided, for reasons best known to themselves (they were extremely wealthy) to make this a loan to their adult child rather than a gift. During probate of the will this loan came to light and because of complications with the various beneficiaries, the adult child ended up having this amount deducted from their share of the estate. It was a complicated estate involving a partner to the deceased who was out for every £ they could get. The estate took over four years to be sorted out, at huge cost. Not just due to this, but other issues too. Keep it simple, make it a gift - freely given.

We gifted some and loaned some.

We have done it, but made it an outright gift. And IIRC had to say so officially for the mortgage lender - they wouldn’t accept a loan - and (for anti money laundering purposes) had to state where the money had come from.

No. We put it in their bank account, the bank checked the source. It was deemed a gift. They were all getting married when we did it.

Marydoll did you go through lawyers?

Oopsadaisy1 They have the mortgage already in place.
I remember when I was starting out and the bank rate always going up. It would be treated as an advance on DD’s inheritance.

We gifted money to our three children ( without them asking) to help secure the houses they wanted, it's better they have it when they needed it, than when we are dead.
The bank did do a paper trail for money laundering reasons.

As the Mortgage is already organised I assuming that the Mortgage Company are ok with you giving them some money towards the deposit?