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The Bank of Family

Research from Legal and General has found that a third of property transactions are being supported by financial gifts from family members.

The term you are most likely used to hearing is the “Bank of Mum and Dad”, however in recent times, this has expanded to include other family members such as grandparents, uncles, aunties etcetera.

It is nothing to be ashamed of.  It is absolutely fantastic that you are able to get your foot on the first rung of the housing ladder, with the additional support of your family behind you!

There are a couple of things to remember when a gift is being provided.

[A piece of terminology for you, the person gifting money is called a Donor]

  1. When requesting an estimate of fees from a prospective legal representative, advise them that you are receiving a gift.  There are multiple steps that need to be taken when dealing with a gifted element, and you will want to ensure that any additional costs are accounted for in the estimate provided.

If you don’t know at the time of obtaining estimates that a family member is providing a gift to you, this is not a problem.  As soon as you do know – let your legal representative know.

Your legal representative will need to carry out ID checks, source and proof of funds checks and obtain a statutory declaration from the donor for the provision of the gift.  The sooner you advise your legal representative, the sooner these steps can take place.

  1. As above, ID checks, proof and source of funds will need to be carried out.

Advise the Donor at the earliest opportunity as to what is expected from them.  Ask for their permission to provide your legal representative with their contact details (full name, full address, email address and telephone number).

  1. Once you have the permission you sought as above from the Donor, provide all of that information to your legal representative.  You should also confirm at this stage the Donor’s relationship with you, and the amount that is being gifted.

Your legal representative will need to advise any prospective lender (i.e. Halifax/Santander) of the fact that there is a gift being provided, and the amount of gift.  This is to ensure that any special conditions of the offer are being dealt with, and that the gifted amount does not affect the level of borrowing.

When you apply for your mortgage offer, advise your broker and the bank/building society that you are receiving a gift.  This will help to prevent any delays during the course of the transaction.  If the banking institution knows at the outset, when your legal representative contacts them for confirmation that they are aware of the gift and are happy to proceed, there won’t be any hesitation in them confirming.

Phew! You can breathe now!  The lender has approved, the checks have all been undertaken, and we have now exchanged.

But, it doesn’t stop there!

Where there is a mortgage involved, your legal representative will need to obtain an Insolvency Indemnity Insurance Policy.  The cost of this insurance is dependent upon the price you are purchasing the property for and the gifted amount.  This policy will cover any shortfall in the event that the Donor becomes bankrupt within 5 years of gifting the monies to you.

This policy will be a one-off premium, payable by you, included on the completion statement provided.

If you, or your Donor, would like any further information in relation to providing the gift and the steps that need to be undertaken, please do not hesitate to contact us at Rowberrys for further guidance and assistance.

After this, all is done, and you can relax in your new home 😊

If you wish to discuss this further, or if you have any other conveyancing enquiries, please contact Lauren Still of Rowberrys on 01344 959153 or

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