A gifted deposit is money given to a homebuyer to buy a property and can equate to some, or all of their deposit needed, with an understanding that you don’t need to repay the person who gave it to you.
Gifted Deposits are beneficial when you can afford your monthly repayments but struggle to afford the initial deposit; this is common for lower-income people. Having more gifted deposit available may also enable you to receive conceivably better rates from a mortgage lender.
It’s usually birth or adopted parents and carers who can gift you the deposit. You may have come across this referred to as the “Bank of Mum & Dad”. Additionally, other family members could also get acknowledged. It depends on the individual lenders, so your dedicated mortgage advisor in Essex needs to be accurate.
We often find that customers don’t know that their parents can support them out with their mortgage or don’t have the confidence to ask for help. Some parents will be more than happy to help their children, it’s a massive chapter in there lives, and their gifted deposit will allow them to live a sheltered life in a property they can call home.
Generally speaking, buying a house is a long term commitment. However taking out a mortgage often works out better than renting, you could potentially be paying less per month. 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, the deposit usually is from inheritance.
Most lenders will not accept a loan to pay off your deposit. It comes down to the lender being uncertain that you’d have enough disposable income to pay back both the loan and the mortgage concurrently.
There is no maximum limit on the amount that someone can give you as a gift, with more deposit often giving you better rates, at least one lender that insists you put in at least 5% deposit from your income.
The people who reap the most benefits from this tend to be First Time Buyers and Home Movers in Essex. It can also be beneficial when used in conjunction with the Help to Buy Scheme, as the required 5% deposit, depending on the lender, can be paid via gifted deposit.
For the most part, all lenders will require a gifted deposit form. Depending on the lender, you may ask to provide additional proof and ID (things like donor ID or bank statements).