Donor Gift Letter To Satisfy Your Mortgage Lender - What Is Required

Your lender will want a letter along these lines...

• Confirm the amount of the gift.

• Whether the gift is repayable.

• Whether the donor has an interest in the property.

• The donor's relationship, i.e. parent, sister.

• Whether donor will occupy the property.

NB: Hopefully this was dealt with by your mortgage broker during the application process.

You, or donor, must supply evidence such as a donor gift letter, donor bank statements, source of wealth and donor ID. Even if you have already done this via your mortgage broker this must be shared directly with your Conveyancer.

Your lender MUST always be informed of any monetary gift, or payment, or price reduction. Lender consent will be required prior to exchange.  

NB: Where you have a mortgage, the donor must usually confirm that the gift WILL NOT be repayable and that they WILL NOT acquire any interest in the property.  If this is not the case and the gift is repayable then your mortgage lender needs to consent to this arrangement as their security must take priority.

ID & Source of Funds

The donor is also required to provide Proof of Identity & Proof of Address under current regulations.  A full paper trail and explanation as to how funds were accumulated is ALWAYS required as Conveyancers are so heavily regulated in this regard.

The Government has made Conveyancers frontline in combatting monetary fraud, identity theft, property related criminal activity, financial crimes and money laundering. The profession has no choice and risk huge penalties and prison time for non-compliance.

Your Conveyancer will require original or certified copies of donor ID plus source of funds evidence. (How The monies were acquired - not just where held).

You cannot proceed without this as that puts your Conveyancer in breach of regulations and their duty of care to your lender.

A donor gift may affect your mortgage and could delay your matter. Especially where your lender is unaware of it. Be clear up front to avoid issues later.