Problems using savings I put into my daughters bank accounts as a deposit

by Readers Question

15:06 PM, 3rd May 2014
About 7 years ago

Problems using savings I put into my daughters bank accounts as a deposit

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Problems using savings I put into my daughters bank accounts as a deposit

TMW (BTL mortgage) have told me that I can’t use my daughters’ (both under the age of 16 yrs old) saving account money for a deposit because “you can’t accept a gift from a child”.  Problems using savings I put into my daughters bank accounts as a deposit

I have been saving in my daughters names for the last 4/5 years because their account is getting 3% pa interest and if it was in my own name I would only have been getting 0.25%pa.

However, my financial consultant and myself were not aware TMW’s “rule” that if money from a child’s saving account was transferred into my own name account more then 30 days before TMW had requested proof of deposit that everything would have been OK.

I transferred the money into my account in March 2014 ready and waiting for completion so the money has been sitting in my account for more than 60 days now. However, TMW are now still insisting that I can’t use this money because they now know it has come from a daughters saving accounts.

I also had a backup plan to sell one of my rental property to raise the deposit “just in case” but I just received a text from my purchaser (1st time buyers) that they too are having no joy with their lender after 2/3 months of chasing around and are now in the process of changing to another lender which means it will take ages to start the whole procedure again!

My vendor has been waiting patiently and I really want to complete this purchase.

I phoned up TMW and wanted to make a compliant about this but they said that they won’t deal with me and will only talk to my broker. I am losing faith in him because he should have known about TMW’s “rule”. If he had told me about it I would have transferred the money into my own account 30 days before submitting my proof of deposit and would have had none of these problems!

Is TMW right about this?

Are there any other ways to overcome this issue?

What other options do I have?

I urgently need somebody to give me advice or other suggestions.

Kind regards

Michelle


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Comments

Mark Alexander

15:10 PM, 3rd May 2014
About 7 years ago

Hi Michelle

Sounds like you might have been too smart for your own good if your broker is incapable of convincing TMW to change their minds.

I can only suggest that you make another application to another lender via another broker.

NOTE TO OTHER READERS

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Jeremy Smith

0:13 AM, 4th May 2014
About 7 years ago

I, too, did not have all the facts presented to me up-front, and have had to make some very quick decisions and actions to present "The Mortgage Works" with the proof that they needed that it was MY money for the deposit.
I did NOT know about this 30-day rule either.
They only accept applications through a broker.
I managed to sort it out quickly by contacting them directly, speed was of the essence.
I have had to sell investments which I was going to hang on to, which has led me to lose alot of money (around £2,000 from £10,000) due to this incompetence.

I am not happy either.
It wasn't the fault of TMW, they are just applying their rules, it's up to us to know what they are, if we ask, or are told !!

martinB

9:46 AM, 4th May 2014
About 7 years ago

I agree with Mark - you were trying to be too clever and if you registered the children's accounts to have no tax deducted, then you have broken the law etc etc blah blah. I think you need to apply to a new lender or perhaps arrange the deposit to be a "gift" from a family member and then repay that "gift" with the money from the children's accounts.

Anon

10:00 AM, 4th May 2014
About 7 years ago

Reply to the comment left by "Martin Rdg" at "04/05/2014 - 09:46":

You are right Martin, both the lender and the adviser have a duty to report suspicion of tax evasion to HMRC. I suspect that may have been what Mark what eluding to when he referred to Michelle as being "too smart for your own good"

Michelle Liberty

22:47 PM, 4th May 2014
About 7 years ago

Reply to the comment left by "Martin Rdg" at "04/05/2014 - 09:46":

Thank-you for your reply. This is the first time post a question on this forum.

You guys make out as I am cheating millions of pounds here! My children are earning between £ 100 or £300 A YEAR of interest here! Could somebody please quickley calculate how much am I avoiding tax here? Hardly call "TAX EVASION TO HMRC"

Is not like I have pre-calculated and planned this tax evasion for 4/5 years while I put my saving in my children's saving account. This buy-to-Let is what I called "accidental purchase" is when I was talking to my next door neighbour ( I owned the property next to the vendor for about 6/7 years so I know the demand for rental is good in that area) as by general chit chat and they said they wanted to sell.

After much consideration with my famiy, inflation costs, University fees in 3 years time for my eldest daughter and another in 6 years time. The money I save hard for in their children's saving account will be nowhere nearer to the "actual amount" they will need to put them thro University. Therefore, I must do something about this now. By taking their money out to buy this house and hopefully with the rental income and capital return ( if any) will help the University fee and cost of living etc etc.

To be honest, I think i been to honest for my own good because I could have easily tranfer the money into my own account 30 days BEFORE I submit the application form therefore we will not have this discussion now.

Michelle Liberty

23:13 PM, 4th May 2014
About 7 years ago

Reply to the comment left by "Jeremy Smith" at "04/05/2014 - 00:13":

Hiya Jeremy,

Thank-you for your reply. Sorry to hear that about your financial loss.. If this will not go thro. I have lost £800 approx. which is alot of money just because I did't know about the 30 day's rule.

I tried to phone them up myself but they refuse to talk to me but only thro. my broker!

They have this 30 days "rule" to prove that it is MY MONEY, but I already transfer the money out from my children's account in March 2014 , therefore, is more then 60 days now.. Don't you think this is enough to prove to them that is 'MY MONEY" ?

Absolutely nightmare and I can't really start another application with another lender as this will take ages and I don't think the Vendor will want to wait! Therefore, I just hope & pray that they MIGHT reverse their mortgage offer!!!

Just wondering has anybody else has compliant to TMW and then they change their decision? They put " special condition /term to the mortgage" that the money must come from the Sale of another rental property, which I have explained in my original post that the 1st time buyer getting no where with their mortgage either. Since then they have apply to another lender but they will take another 3 months before completion ( this is assuming everything runs smoothly with no complication).

Steve From Leicester

12:44 PM, 6th May 2014
About 7 years ago

I'm usually as frustrated as anyone by lenders who impose petty rules which defy common sense but this time I'm struggling to be sympathetic to Michelle (sorry Michelle).

You can't just label money as belonging to your kids (or your granny or your business partner) when it suits you, but insist it is actually your money when you want to spend it elsewhere.

Michelle Liberty

14:16 PM, 6th May 2014
About 7 years ago

Reply to the comment left by "Steve From Leicester" at "06/05/2014 - 12:44":

Hiya Steve,

Thank-you for your comment as I explained in my previous post that now we realised ( included my children) by saving in the kids's account will not get me anywhere close to what my children will need in 3 & 6 yrs time for their University fees.

We as a family agreed to take this money out & buy this property and hope with the rental income & hopeful in years to come will keep the the children in University & sell once we can retire.

Anyway, thank-you for your comment.

Yvette Newbury

3:08 AM, 7th May 2014
About 7 years ago

I did not realise this was still possible - my children have accounts with a well known high street banks and a building society and both no longer allow ANY withdrawals from those accounts unless they are being made into another account in the child's name. We were only trying to withdraw the funds to buy unit trusts for their future too (it is after all their money now, not ours!) but we had to jump through hoops to withdraw the money, and had to provide evidence that the unit trusts were in a bare trust designated with their initials before either financial establishment would release the money. This is a completely different policy as we used to withdraw the money into our bank account and then pay it across to the broker to buy the unit trusts. We imagined it must be a sign of the recession, parents withdrawing children's funds if things got a bit tight. So I am surprised with the advice that Michelle has been given.

Paul Baker

15:09 PM, 10th May 2014
About 7 years ago

Reply to the comment left by "Michelle Liberty" at "04/05/2014 - 22:47":

Sorry to go off topic slightly but I think you'll also find that when a parent 'gifts' money to their child's savings account, even though it may truly be a genuine gift and even if the account is in the name of the child, if the interest earned is greater than £100 in the tax year then all the interest is taxable as the parents income.
This is to avoid parents loading up their children's accounts and stashing the parents savings into it to avoid paying tax and getting a higher interest rate.
Just saying...!

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