Family money: gift or loan?
The bottom line
If parents are helping, decide whether it is a gift or a loan and put it in writing before the bank asks.
Money from parents or family is common and welcome, but the bank will want to know whether it is a gift, which does not have to be repaid, or a loan, which affects your borrowing. The answer also matters if a relationship ends, because a gift to one partner can become shared property.
A deed of gift or a deed of acknowledgement of debt is a short document that records the arrangement. It protects the parents as much as it protects you.
Read this
Receiving money from your parents for your home
Do this
Tell your adviser and your lawyer about any family contribution now
Check yourself
What document records money from parents that does not need repaying?
A deed of gift.
What document records money from parents that is a loan?
A deed of acknowledgement of debt.
Why does the bank care whether it is a gift or a loan?
A loan is a liability that affects how much you can borrow.
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