CONSIDERATION BEFORE GIFTING

WHAT IS A MORTGAGE GIFT LETTER. 

If you decide to go forward with gifting money for a down payment, you will need something known as a mortgage gift letter.  Generally, the mortgage lender will want to know where the gifted money came from, how much it was, and to confirm that this money is, in fact, a gift with no obligation to be repaid.  This is where mortgage gift letters come in. 

A gift is not a loan.  You should also know as the person who is providing the money that this is not a loan.  Any money gifted for a down payment must be provided with no exception of repayment and the gifter must legally certify as much. 

The gift cannot be repaid, so make sure you actually have the money to spare before you gift.  Also, consider that this is only a gift and doe not guarantee a mortgage.  Your recipient will still need to apply and be approved for a motgage on their own.  This means that they need to have acceptable financial credentials for the lender to consider them.  
Luckily, there is no gift tax in Canada for gifted down payment money.  This means that regardless of how much you give, neither the gifter nor the recipient is required to pay taxes. 

 
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