A gifted deposit is either a portion of or the entire amount of deposit you need to put down on a property and obtain a mortgage, given to you purely as a gift (agreed in official documentation) and with an understanding that you will not repay it.
Gifted deposits in Leicester are very useful if you are financially capable of covering the monthly mortgage repayments, but are struggling to save up for the initial deposit as a first time buyer in Leicester.
This can occur perhaps due to a lower income or frequent larger outgoings, such as rental payments and home energy bills. We hear of this a lot when we speak to first time buyers in Leicester.
In receiving a gifted deposit, you may also allow yourself to gain access to much better rates of interest during your mortgage process, especially if that gift is above the minimum 5% deposit requirement.
Generally it will mainly be parents (birth and adopted) and carers who are able to gift you the deposit. This is often discussed online using the terminology “Bank of Mum & Dad”.
Other extended family members may also be able to help out with a gifted deposit. This entirely depends on the mortgage lender that you end up with though, so it is worth speaking to a mortgage advisor in Leicester ahead of time, if that is the case.
We’re often quite surprised at the amount of customers who have no idea their parents are able to help with their mortgage! We also encounter a good portion who feel like they maybe can’t ask their parents for help.
The truth is, the majority of parents out there are more than happy to help their children to find a home of their own, comfortably living as opposed to struggling whilst living in a rental property.
Typically speaking, taking out a mortgage may save you more money per month than you would get from renting, as depending on the conditions of your mortgage, you could be paying much less per month.
The deposit that is gifted often comes from inheritance, although parents can sometimes gift it much earlier if they have enough money saved or have released equity from their own home.
The majority of mortgage lenders won’t agree to accept a loan as a means of paying off your deposit. It will be often relate to the lender not being so sure if you have the ability to afford paying both back at the same time.
Whilst there aren’t limits to the amount that can be gifted to a home buyer, it’s worth remembering that some lenders will want you to have at least 5% from your own savings.
In general, the more you can afford to put down, perhaps combining savings and gift, the better the deals you are going to have access to.
It will usually be first time buyers and people moving house in Leicester who will benefit the most from gifted deposit.
You may also be able to use a gifted deposit to cover the initial 5% deposit for the Help to Buy Equity Loan Scheme, though this will again depend on the mortgage lender.
Your donor will be required to sign a gifted deposit form stating that it is not a loan and is in fact a gift. Additional proof such as ID, address and bank statements may be required.
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