Trying to find a cashpoint at the bank of Mum and Dad?

Its hardly High Street banking

You know how solicitors are always asking personal questions?   Why did you do that?  When were you there?   Where is my cup of tea? Who did you get the money from? Well, if you’re buying a house, then it might well be from your parents.   According to Legal & General the average parental contribution for homebuyers (BoMaD) is £24,100.

Parents have given £6.3bn, more than Clydesdale Bank (who incorporate Yorkshire Bank) who have loaned £5bn and enough to rank them as the 10th largest mortgage lender.

Are they really a lender though?

The BBC might be reporting BoMaD as a lender https://www.bbc.co.uk/news/business-49477404 but its a bit of a misnomer.  The money generally isn’t being loaned, because mainstream banks won’t accept that.  Most banks do not want parents to potentially have an interest in a property (this is all a bit technical on the subject of equity and trusts) so parents are gifting this money to their children.  Its more like paying your children to go away.  presumably in order to get access to their bedroom in order to turn it into a yoga studio (We can’t possibly think who would do this…).

If you are using the BoMaD what will your solicitor want to know?

  • How Much you are getting from your parents?
  • Is it a gift?
  • We will ask your parents for their ID and proof of their source of funds
  • We will ask your parents to sign a “gifted deposit declaration” to prove that the money is a gift and not a loan

We are under no illusion that this is a colossal pain in the whatsit and that it feels like an invasion of privacy but its important that you are protected.  If, later down the line, your parents decide that they want their money back, without us making all these checks they could argue that they own an interest in your house.   Good paperwork makes for good relationships, so perhaps you can forgive us.

What to do if you have any questions?

If you want further information on gifted deposits then email us at hello@landandlaw.co.uk and we will let you have our factsheet on gifted deposits