Gifted deposits from Parents by Affordable Mortgages

Gifted deposits from Parents by Affordable Mortgages

Gifted deposits from Parents by Affordable Mortgages – Aah !!  the good old bank of Mum & Dad,  It’s great that you might have parents willing to gift you the deposit towards your next property  or perhaps they are gifting you equity from their own property as they downsize and sell it to you at a reduced price.

Now  you would think that most UK mortgage lenders would drool at the chance of having a large Gifted deposits from your Parents as that will lower the overall Loan to Value  and their overall risk to them as alender if you dont pay the mortgage.  So as an example – Your looking to buy a £200,000  property  – and you have £10,000  of your own savings,  that would equate to a 5% deposit – meaning you’d need a 95% mortgage   – which is pretty risky for the lender if the mortgage isnt paid as they have to repossess and sell the property with very little margin  to ensure they get all their cash back.

So  you’d think that  if the scenario was – You are buying a £200,000  property,  with £10,000  of uour OWN savings  and a gift from good ol mum n dad  fo £40,000   that the mortgage required now being only  £150,000  or 75% ltv  would be less risky for them and they’d be leaping over you to offer you a great deal !

Well,  the trouble is many lenders are cautious over large gifted deposits,  there have been a few cases where parents have gifted deposits only then for the mortgage to not be paid and the parents then insist that their portion of the deposit should be returned to them,  this has resuted in costly court battles and made lenders more cautious about these deposits.

 

Gifted deposits from Parents by Affordable Mortgages

The GOOD NEWS is that although some lenders are cautious about these gifted deposits, there are plenty of lenders that are willing to accept them,  they all have differeing levels of what they class as acceptable from 5% to 50% for example.  and thats where talking to a mortgage advisor would help you to get the right lender that allows these gifted deposits.

Gifted Equity from Parents by Affordable Mortgages

I mntioned gifted equity from parents as well -as gifted deposits – so whats the difference,  they key difference is that in most cases gifted equity means that  you are buying the property from your parents  or spouse etc  and they are gifting  some  of the equity from the property they live in  to you as part of a kind of discount on the purchase price.

eg  Your buying Mum N Dads 4 bed detached – as they want to move to a 2 bed bungalow  and in effect give you some of your ‘inheritance early’   so  they agree to sell ther £200,000  4 bed house to you for just £150,000, as ths leaves them enough to get their own new pad round the corner.  So  they are gifting you £50,000  in equity from the property – you still decalre you are buying at £200,000  and want a 75% mortgage of £150,000  as the balance has been gifted  ( note most lenders still want to see at least 10% of the purchase price coming from your own savings / sources )

Gifted deposits from Parents by Affordable Mortgages

 

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