If you’re looking to buy a new home, it’s likely that you’ll need to put down a deposit. These days, the minimum deposit is usually equivalent to 5% of the value of the property. A 5% deposit will mean you have a 95% LTV (Loan to Value) ratio.
With house prices in the UK currently at a staggering 8 x average earnings, just getting on the housing ladder can be very difficult. This is where a gifted deposit might help.
A gifted deposit is a sum of money given to you by someone else, usually a member of your family, so that you can put down enough of a deposit to buy a home. Importantly, the money you are gifted must be given by way of a gift and not a loan.
Many mortgage lenders will accept a gifted deposit as all or part of the proof of deposit and borrower provides when requesting a mortgage. However, in order for the deposit to be accepted, the lender will normally require that the following questions are addressed;
- What is the relationship between the mortgage applicant and the gifter
- What is the amount of money they wish to gift;
- Confirmation that the gift is non-refundable;
- That the gifter will hold no legal charge over the property
It’s not unusual for the gifter to be requested to provide a statement of account for where the money has originated. This is usual, for protection against money laundering. Also, should the gifter die within 7 years of giving the money, and the estate is in excess of the current Inheritance Tax (IHT) allowances at the time, there may be some IHT to pay on the gift, usually on a sliding scale.
For more information, book a free appointment with one of our mortgage advisers now.
Recent posts
Data shows landlords could miss out on green mortgages due to expired energy performance certificates.
Buying a house is a big deal, and where you are planning to buy will make a difference financially. In this short blog, we look at the most affordable and most expensive areas and how much you need to be earning to buy in there.
Pros and Cons of Equity Release
10 days ago
Equity release is a type of mortgage that allows homeowners 55 and over to access money from their property's equity without having to leave their home. This is done by securing a loan against the house which is usually repaid by selling the property when the borrower passes away or has to move into long-term care.
Your House Viewing Checklist
11 days ago
It’s important to ask questions about the property you are interested in before taking that step to make an offer. A little probing can make all the difference between buying your dream house or something that requires a lot of work.
Half of over 60s predicted to benefit from accessing housing wealth through Equity Release
14 days ago
There are millions of homeowners over the age of 60 who are likely to release money from their homes to pay for their lifestyle during retirement giving those who are 'asset rich but cash poor' a way to live out their retirement the way they wish.
Average Age of the First Time Buyer in the UK
21 days ago
The average age of a first-time buyer in the UK is two years older than 10 years ago. This is understandable with managing the cost-of-living and challenges within the economy such as high interest rates making it difficult to get onto the property ladder.
Delayed Start Mortgage from Skipton
23 days ago
Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months.
According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.
Gardening Tips for Beginners
28 days ago
If you have recently moved into a property with a garden that requires a little TLC, or you’d like to get on top of your current green space, check out our tips.
More information
Trusted by
