Do banks not accept gifts from family friends?

Allinall

Allinall wrote: »

Where on earth are you getting this from?

Many years of legal practice in this area.

markpb

TheChizler wrote: »

I thought this hasn't got past the broker yet?

Personally my own broker wasn't interested in anything older than 6 months.

They will go further back for larger sums.

Dav010

Louis Friend wrote: »

What insurers?

Don’t know myself, I’ve never been asked by an insurer where I got the deposit, that is why I don’t think it matters, but this poster thinks it might.

Feisar wrote: »

If one was to lie I'm sure the insurer could use it? `I got my insurance through the bank at the time.

cb123

TheChizler wrote: »

I thought this hasn't got past the broker yet?

Personally my own broker wasn't interested in anything older than 6 months.

Broker has sent me the gift letter template to be filled out. In the meantime, we are submitting the application. Apparently don't need the letter just yet.

Broker wasn't interested in anything older than 6 months, but I stupidly opened my mouth and said that the money was a gift. It's kinda obvious though. It's sitting there untouched in a separate account to my regular savings. I think it would have sparked questions.

What I've learnt is to be cuter with money. I should have thought it through and moved it around a little to blend better.

My gifter has decided that they are going to fill out the form as my godmother (no prompt on my end, funnily enough) As she said, it looks like there is more of a connection without any ability to trace it.

I was just very surprised and catch off guard yesterday by the brokers reactions. Over complicated it in my head.

cb123

Padre_Pio wrote: »

Banks may also ask the friend to sign a letter waiving their right to any interest in the property.

Handily, the gift letter has that included:
"I do not, and will not, claim to have any rights, title, interest or estate to the Property."

cb123

cb123 wrote: »

What I've learnt is to be cuter with money. I should have thought it through and moved it around a little to blend better.

How have you learned that? They just wanted you to get a letter signed by someone who you've now easily gotten a signature from. It's not a huge deal.

However, the bank has teams of people trained to spot people that are moving money around, it's called layering and it's one of the main steps in money laundering.

Unless you've done something illegal, you have nothing to hide. Trying to hide it just makes you look suspicious unnecessarily.

cb123

true-or-false wrote: »

How have you learned that? They just wanted you to get a letter signed by someone who you've now easily gotten a signature from. It's not a huge deal.

However, the bank has teams of people trained to spot people that are moving money around, it's called layering and it's one of the main steps in money laundering.

Unless you've done something illegal, you have nothing to hide. Trying to hide it just makes you look suspicious unnecessarily.

Very true but when you hear that banks aren't interested in more than 6 months and my broker telling me they don't look at the source of the money regarding the letter. It just seemed in hindsight it might have been easier to say nothing. But then again, that would also lead to stress.

All good now as I mentioned before I just got a fright when the broker said that banks don't like gifts from friends. I saw my deposit being nearly halved and that would set me back a lot.

Hopefully the letter will be accepted with little to no questions.

TheChizler

markpb wrote: »

They will go further back for larger sums.

Larger balances in an account? What kind of numbers are we talking?

Sarn

They don’t tend to go back more than six months. Often a statement might go back a year. But we were never asked for anything more than 6 months on a fairly large sum.

dennyk

cb123 wrote: »

I was talking to my broker today and she was not impressed that a large chunk of my deposit was gifted by a family friend/non-relation stating the banks only like it when it comes from a direct relative.

Most likely it's not a concern about your tax situation, but the nature of the funds themselves. Generally people are far more likely to gift a large sum of money to a close relative than they are to a "family friend" or acquaintance. In the latter case, it's more likely to be a situation where the "friend" expects to be repaid at some point, even if they claim it's a "gift" to the bank. That would be a problem for the bank because that additional debt (which they didn't account for when underwriting your mortgage loan) would have an impact on your ability to repay your mortgage, and there would also be the possibility that the other lender might potentially have a competing claim on your property as a result, depending on the exact terms of your loan agreement with them.

Hopefully your gift letter will sort the issue out, but it's remotely possible the bank might still be suspicious enough of the nature of these "gifted" funds to decline your application.

liam7831

Probably doesn't look great either to the bank that you didn't save the deposit yourself, in regards to ability to pay back the mortgage.

cb123

dennyk wrote: »

Hopefully your gift letter will sort the issue out, but it's remotely possible the bank might still be suspicious enough of the nature of these "gifted" funds to decline your application.

Hopefully not but I'll just have to wait and see.

liam7831 wrote: »

Probably doesn't look great either to the bank that you didn't save the deposit yourself, in regards to ability to pay back the mortgage.

I'm not worried about that. This past year I have saved enough to have my full deposit and any associated costs with buying a house while paying too much for rent! Other than the gift source, I'm in a very fortunate position.

irelandrover

cb123 wrote: »

Very true but when you hear that banks aren't interested in more than 6 months and my broker telling me they don't look at the source of the money regarding the letter. It just seemed in hindsight it might have been easier to say nothing. But then again, that would also lead to stress.

All good now as I mentioned before I just got a fright when the broker said that banks don't like gifts from friends. I saw my deposit being nearly halved and that would set me back a lot.

Hopefully the letter will be accepted with little to no questions.

Aren't you actually in a much more secure situation now as the person who gifted you the money has no legal claim on your property. So its a good thing you got the letter signed.

KeithTS

It's going back a few years now but I used to assess documentation for mortgages.
We looked for any suspicious monies, for instance, if you save €500 a month but at some point your savings jump €3000, I would ask for proof of where that came from. I had to, banks may be shifty but they have a duty to spot laundering and things. They can also request statements from much further back than 6 months if it looks like your savings patterns don't add up.

I can't say how banks act now but in these cases we would simply request a letter from the person stating it was a gift and a signed waiver stating that they will not seek repayment of the money (it's a gift, not a loan). Didn't matter if it was friend or family, however you can get more tax free from family so it's a little easier. If they didn't provide the waiver, the money would be put down as a loan so could affect the amount that could be borrowed and maybe stop the mortgage application dead in it's tracks.

On top of this, depending on the amount or any other gifts received, an affidavit from the borrower would be sought to state that any tax (if any due) was paid. It wasn't complicated but it could set things back a couple of weeks as it's additional paperwork.

As I said, it's been years sine I've done this so things may have changed but I certainly wouldn't lie as there is no reason to and it would look pretty bad if they saw though it. Remember, the bank want to give you the money, it's how they earn, they just want to be sure that A - you'll pay it back, and B - you're not using them to launder money or dodge tax bills.

cb123

irelandrover wrote: »

Aren't you actually in a much more secure situation now as the person who gifted you the money has no legal claim on your property. So its a good thing you got the letter signed.

Very true

KeithTS wrote: »

It's going back a few years now but I used to assess documentation for mortgages.
We looked for any suspicious monies, for instance, if you save €500 a month but at some point your savings jump €3000, I would ask for proof of where that came from. I had to, banks may be shifty but they have a duty to spot laundering and things. They can also request statements from much further back than 6 months if it looks like your savings patterns don't add up.

I can't say how banks act now but in these cases we would simply request a letter from the person stating it was a gift and a signed waiver stating that they will not seek repayment of the money (it's a gift, not a loan). Didn't matter if it was friend or family, however you can get more tax free from family so it's a little easier. If they didn't provide the waiver, the money would be put down as a loan so could affect the amount that could be borrowed and maybe stop the mortgage application dead in it's tracks.

On top of this, depending on the amount or any other gifts received, an affidavit from the borrower would be sought to state that any tax (if any due) was paid. It wasn't complicated but it could set things back a couple of weeks as it's additional paperwork.

As I said, it's been years sine I've done this so things may have changed but I certainly wouldn't lie as there is no reason to and it would look pretty bad if they saw though it. Remember, the bank want to give you the money, it's how they earn, they just want to be sure that A - you'll pay it back, and B - you're not using them to launder money or dodge tax bills.

Thanks for the insight Keith. Much appreciated. Currently getting the letter signed (needs to be witnessed so a slight delay) I've had steady savings, and I'm pretty confident on the tax situation. So hopefully all will be good

KeithTS

cb123 wrote: »

Very true

Thanks for the insight Keith. Much appreciated. Currently getting the letter signed (needs to be witnessed so a slight delay) I've had steady savings, and I'm pretty confident on the tax situation. So hopefully all will be good

No problem.....hopefully it's still valid advice as it's been a while for me
You don't have anything to worry about I'm sure, nearly every mortgage I ever saw draw down had gifts of some sort that made up part of the deposit.

Perhaps before handing anything over to the bank ask a mortgage advisor at that bank whether they accept gifts from non-family as some lenders might not allow it or things may have changed. You could just cold call them and tell them you're getting everything lined up and a family friend wants to contribute to your deposit and ask if they accept that before you apply. No need to tell them who you are if you're nervous about that.

That may be safer than taking a strangers word for it on the internet after all.