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It's not uncommon for a family member to give another a 'gift' for a house deposit, I am considering something currently with giving someone in my immediate family money for this purpose. The advice so far has been to sort out amendments to Wills in the unfortunate circumstance one of us pops it.
Giving to a friend, I don't imagine it's much different, but in any case the mortgage lender hasn't asked, does it matter to them any more that you won a raffle or inherited a tin mine in Devon?
onyerbike-
a 'gift'
It needs to be a gift, and not a 'gift'.
If the conveyancing is done correctly, there will be all sorts of declarations to that end - In particular, that it is not repayable.
It will count against your IHT threshold limit, if you are unlucky enough to cark it within 7 years - Even of the person pays back the 'gift'.
The mortgage lender will need to know the source of funds of the gift also, for anti-money laundering checks.
Both of the above, because it is otherwise a great wheeze for getting dirty money into circulation, or for avoiding various taxes.
NotThamesWater
Not investment but not entirely unrelated.
I'm considering lending a friend some money toward a house deposit. They've not asked and I've not offered yet. I don't have any concerns about trustworthiness or ability to repay, and I've no need to make any money out of it. I'm happy to lose the equivalent interest by not investing it.
But when applying for a mortgage the bank will obviously ask about anything owing. Ideally I (and I imagine my friend) would like it to be above board. So calling it a gift probably isn't advisable(?).
Is something like the following at all legit?
Lending (for example) £10,000, at a rate of 0% interest, to be repaid over the next 20 years, allowing unlimited overpayments.
In reality, they'd be able to repay over a couple of years, but I suspect the bank would prefer seeing an outgoing of £40 instead of £400pm.
Naturally I'd just forward the bank manager to this thread as proof that I've been properly advised by LFGIFA's.