Real Estate

What are the logistics of a family member gifting me $50K from their chequing account

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  • Jul 2nd, 2020 2:11 pm
[OP]
Newbie
Oct 6, 2010
19 posts
3 upvotes
toronto

What are the logistics of a family member gifting me $50K from their chequing account

A family member is planning to gift me 50K to help with a purchase of a home. What exactly are the step, and how long does it take (I.e from the time I deposit the cheque of such a sum into my own chequing account)
13 replies
Deal Addict
Jun 7, 2017
1043 posts
832 upvotes
BC
That's a nice gesture. If not direct xfer, just deposit the cheque. The money must be in your acct for approx 90 days when your credit worthiness is evaluated.
[OP]
Newbie
Oct 6, 2010
19 posts
3 upvotes
toronto
What if the money isn’t in there for 90 days?
Deal Guru
Feb 22, 2011
12606 posts
16094 upvotes
Toronto
randomnick wrote: What if the money isn’t in there for 90 days?
It doesn't have to be if it's a gift, you just end up needing to provide a letter from the relative stating it's a gift.
Deal Addict
User avatar
Jun 24, 2020
3001 posts
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sircheersa wrote: It doesn't have to be if it's a gift, you just end up needing to provide a letter from the relative stating it's a gift.
Exactly, some lenders are ok with it being In the account 15 days prior to closing. They just sign the letter stating it’s a gift and that you don’t need to pay it back to them. Also it should be from an immediate family member for most lenders.
[OP]
Newbie
Oct 6, 2010
19 posts
3 upvotes
toronto
TazZaide wrote: Exactly, some lenders are ok with it being In the account 15 days prior to closing. They just sign the letter stating it’s a gift and that you don’t need to pay it back to them. Also it should be from an immediate family member for most lenders.
So it’s interesting that you say prior to closing, because if we win this bid, they actually want a delayed closing of up to 3-4 months. If my parents gift me the money as soon as we win the bid, will there be issues?
Deal Addict
User avatar
Jun 24, 2020
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randomnick wrote: So it’s interesting that you say prior to closing, because if we win this bid, they actually want a delayed closing of up to 3-4 months. If my parents gift me the money as soon as we win the bid, will there be issues?
No, wont be any issue. As long as the family
Member signs off on the gift letter. Some lenders might ask for a donor bank statement to see where the money came from as well, so just be cautious ensuring that the family member can verify the source if need be.
[OP]
Newbie
Oct 6, 2010
19 posts
3 upvotes
toronto
Is it a problem if they took it out of their available LOC? It’s not a loan that they are requiring us to pay.
Deal Addict
Jun 7, 2017
1043 posts
832 upvotes
BC
That’s how families disintegrate and go bankrupt.
Deal Addict
May 9, 2017
1224 posts
1312 upvotes
randomnick wrote: Is it a problem if they took it out of their available LOC? It’s not a loan that they are requiring us to pay.
What's the "cash" interest rate on "gifts" these days?
Deal Addict
Jun 26, 2019
2003 posts
1734 upvotes
GTA
randomnick wrote: Is it a problem if they took it out of their available LOC? It’s not a loan that they are requiring us to pay.
As previously stated, the main party that is interested in this will be your mortgage provider. In order to evaluate your application and finalize it, if you need this $50k to qualify for the mortgage, they will require your family to sign a gift letter stating that this money has been given to you as a gift (ie, you owe them nothing). Alternatively, they could set it up as a 2nd mortgage or a loan to you at 0% interest or something, but this may impact your ability to qualify.

All in all, your mortgage provider won't care too much where the money came from, more so that its yours and they can verify where it came from. Ie it was gifted to you and was legally obtained.
Deal Fanatic
Jan 15, 2017
5232 posts
5273 upvotes
Ottawa
randomnick wrote: Is it a problem if they took it out of their available LOC? It’s not a loan that they are requiring us to pay.
You should pose your question to the mortgage thread. CMHC recently made changes that disallowed borrowed down payments. While gifted down payments are still allowed, I don't know how CMHC would feel about the gifted down payment being borrowed.
Deal Addict
Jun 26, 2019
2003 posts
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GTA
skeet50 wrote: While gifted down payments are still allowed, I don't know how CMHC would feel about the gifted down payment being borrowed.
I think the key thing about a gift, is as soon as the money is gifted, it does not count as being leveraged/loaned/factored into any ratios/etc. Therefore it would just count as a cash down payment, and on a completely unrelated note, the person who gifted the money would have leveraged themselves, but the money is separate.

These things said, in the past, there has been precedent set in the case of bankruptcies that some creditors are allowed to pursue gifts given. So if the person who borrowed the money and gifted it to you, claimed bankruptcy, it is possible that someone could come after that gift.
Deal Fanatic
Jan 15, 2017
5232 posts
5273 upvotes
Ottawa
SubjectivelyObjective wrote: I think the key thing about a gift, is as soon as the money is gifted, it does not count as being leveraged/loaned/factored into any ratios/etc. Therefore it would just count as a cash down payment, and on a completely unrelated note, the person who gifted the money would have leveraged themselves, but the money is separate.

These things said, in the past, there has been precedent set in the case of bankruptcies that some creditors are allowed to pursue gifts given. So if the person who borrowed the money and gifted it to you, claimed bankruptcy, it is possible that someone could come after that gift.
I'm not sure exactly how the CMHC is applying this recent change to policy which is why I suggested that the OP pose the question to the mortgage experts.

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