Recent surveys show that the “Bank of Mum and Dad” is playing a huge role in the current property market. According to recent news reports one in four buyers expects to receive financial assistance from family and friends and the average parental contribution this year is in the region of £18,000.
Receiving a contribution from parents or other third parties is not entirely straightforward. Any such contribution must be disclosed to your mortgage lender and to your conveyancing solicitor.
As part of the conveyancing process your solicitor will need to check the source of funds being used to purchase the property. Your solicitor will need to contact the third party to establish their identity, ask for evidence of the source of funds and to establish that the contribution is a gift and that the third party is not expecting to receive an interest in the property. Your solicitor will also need to advise the third party to take independent legal advice on the gift as there may be other implications such as a potential effect on inheritance tax liability.
In order to avoid delays in the conveyancing process, it is important that you have proof of your finances available before you instruct us.