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Parental Gifts

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  • 15-07-2010 10:46am
    #1
    Kintarō Hattori
    Registered Users Posts: 14,987 ✭✭✭✭


    Hey Folks,

    In regards to parental gifts can you give me some advice on the following:


    Parents A are willing to give their daughter a parental gift in order to help with the deposit on a house. They expect to have this repaid and will have no claim over the house.

    Parents B are willing to give their son a parental gift in order to help with the deposit on a house. They expect to have this repaid and will have no claim over the house. However they want to lend the money through a solicitor to keep things 'official'.


    I imagine the first scenario would be better for a bank. Would a bank have a problem with scenario B?


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    #2
    Da GOAT
    Registered Users Posts: 453 ✭✭Da GOAT


    whose parents go through solicitors? bank will not be impressed with B in my opinion, in fact im almost sure they will refuse on the basis you cannot fund a deposit with a loan.


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    #3
    Kintarō Hattori
    Registered Users Posts: 14,987 ✭✭✭✭Kintarō Hattori


    Da GOAT wrote: »
    whose parents go through solicitors? bank will not be impressed with B in my opinion, in fact im almost sure they will refuse on the basis you cannot fund a deposit with a loan.

    Mine :(


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    #4
    Xiney
    Registered Users Posts: 8,085 ✭✭✭Xiney


    Those are not gifts, from a legal/financial point of view. Gifts are not to be repaid.


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    #5
    Da GOAT
    Registered Users Posts: 453 ✭✭Da GOAT


    well im fairly sure, that if you take out a loan for a mortgage its not allowed plus if the bank found out about it at a later date then they do have some options against you (though im not sure what actions they would take).

    The deposit has to look like your money. You can pay it back to them sure but u cant tell the bank that.


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    #6
    Kintarō Hattori
    Registered Users Posts: 14,987 ✭✭✭✭Kintarō Hattori


    OK thanks guys, I guess we'll go with the help from her folks.


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    #7
    DYLF
    Registered Users Posts: 320 ✭✭DYLF


    Kintarō Hattori wrote: »
    OK thanks guys, I guess we'll go with the help from her folks.


    dont think the bank will go with either to be honest..

    bought my house last year.. most of the deposit was a gift from my wifes parents. the bank requested a letter from them to say it was a "non refundable gift"


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    #8
    Eglinton
    Closed Accounts Posts: 992 ✭✭✭Eglinton


    Why are either set of parents expecting it to be repaid? Most parents (that I know anyway) would gladly give whatever they could afford to get their children started. If you yourself wanted to repay them, that's up to you.

    Otherwise, as others have said, it's a loan and not acceptable as deposit.


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    #9
    foxy06
    Registered Users Posts: 2,138 ✭✭✭foxy06


    Just a query that is sort of related. If his parents were to get a loan that they would pay back and using their own home as security and give the money to us but on the condition from their bank that it has to go off a house how do I prove that it has? I would be using a different bank and was assuming the money would need to be in our account first before we would get approval but don't know if their bank will give it first. Any ideas?


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    #10
    JuliusCaesar
    Registered Users Posts: 4,882 ✭✭✭JuliusCaesar


    foxy06 wrote: »
    Just a query that is sort of related. If his parents were to get a loan that they would pay back and using their own home as security and give the money to us but on the condition from their bank that it has to go off a house how do I prove that it has? I would be using a different bank and was assuming the money would need to be in our account first before we would get approval but don't know if their bank will give it first. Any ideas?

    His parents borrow money from the bank and give it to you.
    Well, in effect you are borrowing the money.but his parents are guaranteeing the bank they'll be repaid. Most unlikely the bank is demanding that you (the eventual beneficiaries of the loan) use it to buy a house. More likely his parents are making this condition.

    DYLF, the bank may want a letter from the parents stating it's a non-refundable gift, but most parents would write this to help you -but actually want to be repaid.

    OP, you can make a loan official with a handwritten IOU. No need to go to solicitors.

    Eglington, most parents would like to help their children but may not be in a position to, or want to, hand out gifts. They might not be well off, they might have other dependents or committments; and they might think that most young couples go through a period of financial hardship in order to save and this might well be character-building and ensure the relationship will last.


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    #11
    ChewChew
    Moderators Posts: 24,367 ✭✭✭✭ChewChew


    Eglinton wrote: »
    Why are either set of parents expecting it to be repaid? Most parents (that I know anyway) would gladly give whatever they could afford to get their children started. If you yourself wanted to repay them, that's up to you.

    Otherwise, as others have said, it's a loan and not acceptable as deposit.
    because I would imagine alot of parents do not have a couple of grand be it 1,5 10 or 20 to just hand over, considering the times we are in, it's proving more difficult for people to part with their monies, plus, why should parents be expected to hand over their savings? If you want it.. you buy it.. tough sh*t if you dont have all the cash for it... a dig out in terms of a loan is perfectly acceptable.

    A friend of mine bought a house this year, her circumstances weren't the most desirable so she approached her parents as she had not got a 20k deposit so her parents had that money but that was all they have in their savings so they applied for a loan that my friend will have to repay, it looks like she has the deposit, but she also has to pay that back.

    Imo... that is an ideal option.


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    #12
    Kintarō Hattori
    Registered Users Posts: 14,987 ✭✭✭✭Kintarō Hattori


    Eglinton wrote: »
    Why are either set of parents expecting it to be repaid? Most parents (that I know anyway) would gladly give whatever they could afford to get their children started. If you yourself wanted to repay them, that's up to you.

    Otherwise, as others have said, it's a loan and not acceptable as deposit.

    We saved hard and a few years ago we looked at buying a place here. Prices were ludicrous so we bought an apartment in Poland- a long term investment for us. We continued saving and hadn't actually planned on buying just yet but prices have come down and we've seen some interesting places.

    We have a good portion of the deposit/costs saved but do need a little help. Asking my folks was the worst thing I've ever had to do as I've never asked them for anything in my adult life. Everything I've wanted I worked for. I'd never have asked the folks for a hand and not pay it back. Retired they take home more than I earn so I'm guessing they can spare a little for a short time!


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    #13
    Graces7
    Registered Users Posts: 32,634 ✭✭✭✭Graces7


    Maybe I am being disingenuous here; but why does anyone have to know where the money is coming from? Can the parents not just hand it over to the child?

    And let any repayment etc then be a private matter within the family?


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    #14
    astrofool
    Registered Users Posts: 16,641 ✭✭✭✭astrofool


    There are tax implications to handing over money, it would come out of inheritance.

    Kintarō Hattori, you know that by buying in Poland, you have given up your FTB status, and will be liable for stamp duty on all but new homes under 125m^2 in Ireland?


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    #15
    Kintarō Hattori
    Registered Users Posts: 14,987 ✭✭✭✭Kintarō Hattori


    astrofool wrote: »
    There are tax implications to handing over money, it would come out of inheritance.

    Kintarō Hattori, you know that by buying in Poland, you have given up your FTB status, and will be liable for stamp duty on all but new homes under 125m^2 in Ireland?

    I haven't, she has. :)


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    #16
    astrofool
    Registered Users Posts: 16,641 ✭✭✭✭astrofool


    If her name goes on the deeds (which has to happen if you want a joint mortgage based off both earnings), then it counts for both of you.

    Otherwise, you'll need to buy alone, and then pay extra to get here name on the deeds in later years.


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    #17
    The_Morrigan
    Registered Users Posts: 9,368 ✭✭✭The_Morrigan


    My father gave me a "gift" a few years ago to buy my place. The reasoning was that he could get an equity release on his mortgage which was at a lower rate than the mortgage I was going to get. I had the deposit saved, he just didn't want me getting a massive mortgage. He had to sign a declaration from the bank that it was in fact a gift. However, I'm still paying it back on a monthly basis, cos they don't have a lot of savings for me to inherit, I think this was Dad's way of giving me a bit up front in the way of not having as much interest to pay back over the life of the loan!!
    He keeps telling me we should get that loan put back into my name, not a chance of that happening ! I did point out to him, that as the liability is in his name, if he dies before I pay him back all of it, the debt is wiped clean by his payment protection/insurance :D


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    #18
    Victor
    Registered Users Posts: 78,387 ✭✭✭✭Victor


    NiMhaoldearg wrote: »
    He keeps telling me we should get that loan put back into my name
    ~The bank may not allow that anyway, they much prefer liability to be spread over several people, so they can chase them all and not have all their eggs in one basket.


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    #19
    Victor
    Registered Users Posts: 78,387 ✭✭✭✭Victor


    Graces7 wrote: »
    Maybe I am being disingenuous here; but why does anyone have to know where the money is coming from?
    Because a bank is going to look more favourably at someone with €30,000 of their own money (and a proven ability to save) than someone with €10,000 of their own money and €20,000 from their parents.


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    #20
    The_Morrigan
    Registered Users Posts: 9,368 ✭✭✭The_Morrigan


    Victor wrote: »
    ~The bank may not allow that anyway, they much prefer liability to be spread over several people, so they can chase them all and not have all their eggs in one basket.


    Ah they would, I've a good credit rating with them :D
    They've just given me a loan to help me pay the 15k fees for completing the LLB - it so better be worth it!!


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    #21
    Tigger
    Closed Accounts Posts: 16,705 ✭✭✭✭Tigger


    Kintarō Hattori wrote: »
    Mine :(

    lol

    nothing wrong with keeping things styraight


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    #22
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    If they expect the loan to be repaid- as opposed to gifting the sum to the child- it is a financial consideration that is in the best interests of everyone remain in the open.

    There are two options here- other than doing things under the table-

    1. Register a second legal mortgage on the property being purchased, after the banks mortgage.

    2. Have the parents act as guarantors on the mortgage- with the intention of removing them as guarantors at the earliest possible opportunity.

    Ps- it is not a 'gift' if it has to be repaid......


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