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When does "gift" money stop being a gift?

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  • When does "gift" money stop being a gift?

    My father very kindly gave us money as early inheritance, not for any specific purpose. This was over a year ago and we have slowly transferred the money into our help to buy ISA's. Now it seems that this is causing problems with our mortgage company, as our mortgage broker has said this does not count as a gift mortgage and but the solicitor advised that this is gifted money. To add another layer of complications, My Dad uses our address as a postal address for the UK, but he often stays with my family in South Africa, however the solicitor seems very upset that my Dad is at our address and is "living" with us.

    So my question is, how long does the money have to be in our accounts before it is just our money. And why would my Dad using our address cause a problem with the solicitor?

  • #2
    Hi Candice,

    I'm not a solicitor so this might not be 100% but I think it's something to do with the expected outcome of the gift. When parents give a lump sum gift as a deposit, they have to sign a waiver with the lender saying that they don't expect anything back in return and that they have absolutely no stake in the property.

    If your dad is registered at your address, it perhaps looks like he might benefit from giving you the money by living with you, and will have a stake in the property that way?

    I would have thought he could sign something with the lender to say he gave you the total amount of X but it has been transferred gradually into an ISA, and that it is still a gift?

    (Also, please be aware that if you're using a Help to Buy ISA for your deposit, you likely won't be able to access the money until after completion on your property. Quite a few people have been stung by that, so it may be worth keeping part of the lump sum of the inheritance and getting your dad to sign a traditional gift agreement instead.) There's more info on this here: https://www.reallymoving.com/news/se...sa-not-helpful

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