Helping Family Buy Property, Made Clear
Helping a child or other family member buy a home can involve more than transferring money. Whether support is being provided as a gifted deposit, family loan or contribution towards the purchase price, Aim Legal can help make the property and conveyancing arrangements clear.
Clear legal support when family is helping with a property purchase
Family support can make an important difference when someone is buying a home, but the way that support is structured needs to be clear. A contribution may be an outright gift, a repayable loan or part of a wider ownership arrangement, and each can affect the conveyancing work and the information required by a mortgage lender.
We can help identify how the contribution fits into the transaction, deal with the relevant conveyancing requirements and explain the property arrangements to the parties involved. Where separate advice or additional documentation is appropriate, we will explain this so that everyone understands the next steps.
Family-assisted purchases handled with clarity
Support may take different forms. We help with the property-law and conveyancing aspects of family-assisted purchases and explain what information may be needed.
Gifted deposits
A gifted deposit is money provided towards the purchase without an expectation that it will be repaid or that the person providing it will…
Learn more →Family loans
If the money is intended to be repaid, it should not simply be treated as a gift. The terms of the family loan, the…
Learn more →Contributing towards a jointly owned property
Where more than one person will own the property, it is important to consider how the legal ownership and financial contributions are to be…
Learn more →Declarations of trust
A declaration of trust can be used in appropriate circumstances to record beneficial interests or agreed financial arrangements connected with a property. Whether one…
Learn more →How does a family-assisted purchase work?
The exact steps depend on the transaction and how the family contribution is structured, but the process will usually include the following stages.
Confirm the purchase and family contribution
We establish who is buying the property, who is providing financial assistance and whether the contribution is intended to be a gift, loan or part of an ownership arrangement.
Identity and source-of-funds checks
The required identity, anti-money-laundering and source-of-funds information is obtained from the relevant parties, including third-party contributors where required.
Mortgage lender requirements
If the buyer is using a mortgage, the lender’s requirements are considered. A lender may require information or confirmation about a gifted deposit, loan or other third-party contribution.
Title, contract and property checks
The usual purchase conveyancing work continues, including review of the title and contract papers, searches and enquiries about the property.
Document the agreed arrangement
Where the parties need an ownership or contribution arrangement recorded, the appropriate documentation can be considered and any need for separate legal advice explained.
Exchange, completion and registration
Once the legal and funding requirements are satisfied, the matter can proceed to exchange and completion, followed by the applicable post-completion and Land Registry formalities.
Gifted deposits
A gifted deposit is money provided towards the purchase without an expectation that it will be repaid or that the person providing it will receive an ownership interest in the property. The buyer’s conveyancer will normally need information about the gift and the source of the funds, and a mortgage lender may have its own requirements.
Family loans
If the money is intended to be repaid, it should not simply be treated as a gift. The terms of the family loan, the expectations of the parties and any mortgage lender requirements need to be considered. If security over the property is proposed, this can involve additional legal and lender considerations.
Contributing towards a jointly owned property
Where more than one person will own the property, it is important to consider how the legal ownership and financial contributions are to be reflected. The conveyancing process can record the form of co-ownership and identify whether further documentation is appropriate.
Declarations of trust
A declaration of trust can be used in appropriate circumstances to record beneficial interests or agreed financial arrangements connected with a property. Whether one is suitable depends on the ownership structure and what the parties want to achieve. Separate legal advice may be required where interests differ.
Mortgage lender requirements
Mortgage lenders can have specific requirements where part of the purchase price comes from a third party. The lender must be given the information required for the transaction, and the proposed family arrangement must not conflict with the terms of the mortgage offer.
Source of funds and compliance checks
Property transactions are subject to identity and anti-money-laundering checks. Where a family member is providing purchase funds, evidence may be required to show where the money has come from and how it is being provided.
Exchange, completion and post-completion
Once the purchase, funding and legal requirements are satisfied, contracts can be exchanged and a completion date agreed. Following completion, the relevant tax and HM Land Registry formalities are dealt with as applicable.
Will family assistance delay the purchase?
Not necessarily, but third-party funding can introduce additional checks and lender requirements. Providing information about the family contribution and source of funds early can help avoid unnecessary delay. The overall timetable will also depend on the property chain, searches, enquiries and mortgage arrangements.
Clear advice for buyers and supporting family members
Family-assisted purchases can involve several people with different expectations. We focus on making the property transaction and the contribution arrangements understandable while progressing the conveyancing work carefully.
Family-assisted property purchase questions
Answers to common questions when parents or other family members are helping someone purchase a home.
Can my parents gift me money for a house deposit?+
A family member can contribute money towards a purchase as a genuine gift, subject to the conveyancing checks and any mortgage lender requirements. Your conveyancer will normally need information about the person providing the funds, the source of the money and the nature of the gift.
What is the difference between a gifted deposit and a family loan?+
A genuine gift is normally provided without an expectation of repayment or an ownership interest. A loan is intended to be repaid and may require different documentation and consideration of the mortgage lender’s requirements. It is important that the arrangement is described accurately.
Does a mortgage lender need to know about family money?+
Yes, where a mortgage is involved the lender must receive the information it requires about the source and nature of the buyer’s deposit and any third-party contribution. Requirements vary between lenders and transactions.
Can a family member protect the money they contribute?+
Depending on the arrangement, there may be ways to record or protect a financial interest, such as an agreed ownership structure or appropriate legal documentation. This needs to be considered alongside any mortgage lender requirements, and separate legal advice may be appropriate where the parties have different interests.
What is a declaration of trust?+
A declaration of trust is a legal document that can record beneficial interests or agreed financial arrangements relating to a property. Whether one is appropriate depends on the circumstances, including who owns the property and what the parties intend their contributions to represent.
Will the person giving me a deposit need to provide documents?+
Usually, third-party contributors will need to provide information for identity, source-of-funds and compliance checks. The exact documents required depend on the circumstances and, where applicable, the mortgage lender’s requirements.
Helping a family member with a property purchase?
Speak to Aim Legal about the conveyancing requirements, family contribution and the next steps for the purchase.
