A gifted deposit is either the full amount or a portion of the assurance you need, granted to you as a gift with an agreement that you don’t have to repay the person who has given it to you.
Gifted Deposits come in useful when you have been able to save enough for your monthly repayments but have been struggling to afford the initial deposit, something that’s common for people on smaller incomes.
Obtaining more gifted deposits available may also allow you to receive potentially better rates from a mortgage lender.
We frequently find that it is mainly parents (birth and adopted) and carers who can gift you the deposit. You may see this referred to online as the “Bank of Mum & Dad”.
Other extended family members could also get considered when looking at the option of a gifted deposit. It is significantly much dependent on individual lenders so your dedicated mortgage advisor in Leicester would need to be cautious.
We frequently find that customers have no idea that their parents can help them out with their mortgage, or they don’t feel like they can ask them to help out.
In truth, most parents are more than pleased to be able to help their children, wanting them to get on the property ladder and live a comfortable life in a property they possess.
Statistically, taking out a mortgage often will work out better than renting, due to the potential for you to pay less per month.
The deposit usually comes from inheritance, although parents can sometimes gift it earlier on in life if they already have enough saved or have released a certain amount of equity from their own home.
Most lenders won’t agree to accept a loan to pay off your deposit. It will be down to the lender being unsure that you’d have enough disposable income to pay back both the loan and the mortgage simultaneously.
There is no limit on the amount that someone can give you as a gift, with more deposit often giving you better rates, though we are aware of at least some lenders will insist you put in at least 5% deposit from your income.
The people who reap the most advantages from this tend to be First Time Buyers and Home Movers. It can also be beneficial when used in combination with the Help to Buy Scheme. As the required 5% deposit, depending on the lender, can be paid via gifted deposit.
First and foremost, all lenders will require a gifted deposit form. Dependent on the lender, you might get asked to provide additional proof and ID.
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