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- They provide the money towards a deposit, with no expectation of capital repayment (it will be deducted from inheritance at a later date, or will form part of the estate's assets, to make it fair for my wife's siblings)

- We give them 3% of the deposit amount each year

What you are describing is a long-term loan. Ideally, you'd document the transaction. A lawyer would be the right professional for that.

You've also got some tax issues. I'd want to check that the 3% interest is sufficient to avoid imputed income. For those calculations, you'd need to talk to a tax professional - an EA, a CPA, or a licensed preparer.

Finally, the lender on the house will be very interested in this transaction. You're essentially taking on another loan - and that may affect your ability to repay the mortgage. Failing to disclose this loan from your in-laws on your mortgage application might be mortgage fraud. You really don't want to go there, particularly in the current lending environment.

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