Paying off daughters mortgage

[parn52]

My daughter’s struggling and I’d like to help by paying off the remainder of her mortgage, especially once her fixed deal ends in July, I’ve not discussed this with her yet, but from memory it’s around £40-45 thousand.

I’ve been told by a friend I won’t be able to clear the mortgage straight from my bank, and that i would have to transfer her the money into her bank and then she can pay it from there, this is because the account number for the mortgage will be 9 digits and not the standard 8, is there a way around this?

The issue with that is that she’s on universal credit, and If I transfer her that sum of money they’ll probably stop her entitlement.

[springfan62]

I would ring the lender and ask, I can't see how they could stop you paying it off from another account.

It may be that you need to send it to their bank account and use the mortgage account number as a refernce.

[AB]

Yeah, you should be able to pay the lender direct.

[LivLL]

https://www.onlinemortgageadvisor.co.uk/blog/what-...

[jasonrobertson86]

AB said:

Yeah, you should be able to pay the lender direct.

This. It doesn't matter which name it comes from.

[Chamon_Lee]

Yeah they won’t care, the only thing they will state is they may want to check your source of funds etc. they didn’t check mine but I’m sure they do random spot checks.

[Rufus Stone]

Of course they will care who settles the mortgage. They have anti money laundering obligations.

[TheLurker]

Rufus Stone said:

Of course they will care who settles the mortgage. They have anti money laundering obligations.

In my very limited experience, absolutely this!

[barryrs]

She may be receiving housing costs within the UC payment and as such might see a reduction in benefits by settling the mortgage.

If she has no savings you might be able to gift her around £6k per year towards the payments without effecting her circumstances.

Of course she may waste it on holidays instead!

[S366]

TheLurker said:

Rufus Stone said:

Of course they will care who settles the mortgage. They have anti money laundering obligations.

In my very limited experience, absolutely this!

They may have questions, but as long as it’s a legitimate transaction, then it’s not an issue if someone other than the current mortgage holder clears the balance.

[Wheelspinning]

Top Dad....if you could, you would.

[loskie]

under HMRC rule can't you only gift a max of £3k per year? Then tax comes into it.

[parn52]

So shouldn’t be an issue at all then avoiding her bank account, perfect.

She isn’t claiming housing cost on universal credit, just the child credit so shouldn’t effect her on going entitlement I don’t think

[Wheelspinning]

loskie said:

under HMRC rule can't you only gift a max of £3k per year? Then tax comes into it.

The advice I was given was that it was no issue at all as it was a gift, but if the person who gifted it dies within 7 years, IT shall be applied the portion of the years remaining of the 7.

[anonymous-user]

Did this for FiL about 6 years ago. Mortgage with building society - easy, wife did it over the phone. Much smaller loan with loan co. - all sorts of aggro due to inept application of of ML rules by lender's solicitor. Took weeks but got there in the end.

So from my experience - yes you can do it and it may be simple or there might be hoops.

[Countdown]

parn52 said:

My daughter’s struggling and I’d like to help by paying off the remainder of her mortgage, especially once her fixed deal ends in July, I’ve not discussed this with her yet, but from memory it’s around £40-45 thousand.

I’ve been told by a friend I won’t be able to clear the mortgage straight from my bank, and that i would have to transfer her the money into her bank and then she can pay it from there, this is because the account number for the mortgage will be 9 digits and not the standard 8, is there a way around this?

Tell her to phone the bank and explain the situation to them. You may need to provide something in writing to confirm that this is a gift. You might also need to provide copies of your bank statements so they can see where the money is coming from. I had to do this when i was giving my daughter some money towards her mortgage.

parn52 said:

The issue with that is that she’s on universal credit, and If I transfer her that sum of money they’ll probably stop her entitlement.

It will only affect her UC to the extent that if she's getting help with the Mortgage interest that will be stopped.

[Rufus Stone]

loskie said:

under HMRC rule can't you only gift a max of £3k per year? Then tax comes into it.

There is potentially an IHT issue if the OP dies within 7 years of the gift. But most estates aren't subject to IHT anyway.

[Panamax]

Another possibility to consider is lending her the money to pay off the mortgage. Then she still has the same amount of debt but lower (or zero) interest to pay. You could even take a charge over the property - i.e. make it a formal mortgage.

But if you want the payment to be effective in terms of IHT planning (7 year survival) it needs to be an outright gift.

[S366]

loskie said:

under HMRC rule can't you only gift a max of £3k per year? Then tax comes into it.

Tax only comes in if the OP passes away within 7 years, otherwise no tax implications at all, he could gift her £3m and there’d be zero tax to pay.

[jasonrobertson86]

loskie said:

under HMRC rule can't you only gift a max of £3k per year? Then tax comes into it.

It's best not to guess stuff if you don't know.