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First Time Buyer - Gift in Kind Mortgage

Last post Mon, Jul 18 2011, 7:49 PM by Zeb. 2 replies.
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  •  Mon, Jul 18 2011, 7:49 PM

    Re: First Time Buyer - Gift in Kind Mortgage

    maxsteam:Some lenders will accept gifted deposits (Halifax?) but most will value the house at the lower of the price paid and their value’s opinion. Your chances of persuading a lender to accept this would be increased if there were indeed £10050 being passed between bank accounts.

    Not quite right.

    If your family agree you can indeed buy the house at the market value of £110,950 and then they could "gift" you the £10,050 as a deposit to make the mortgage needed £99,950. Lenders in general will accept a deposit minimum of 10%. All lenders will accept this type of deposit if it is through family that the gift is coming as normally it is parents allowing their children to buy the parental house at a discount. I assume it is the same or something similar here.

    If you put down the purchase price at £99,050 then the lender will take this as the price and you will have to find an additional deposit to put down on the property...minimum of 10%. There is no minimum of deposit that you can be given. If you were lucky enough your family could gift you £100,000 and the lender would not question it but they would of course want some proof of it for any amount of gift and this is usually by way of a signed letter from the title holders of the property.

    I think what Maxsteam is thinking about is an incentivised deposit whereby a builder or some other corporate body would offer a discount on the purchase price...an incentive for the sale. Lenders do also allow this but normally on to a maximum of 5% although Halifax (used to) allow you to receive any incentive as long as you matched the incentive with exactly the same value so if they gave you say a 20% discount to the value of £20,000 then you would have to put down an additional £20% (£20,000) yourself leaving only a mortgage of 60%. This may not still be correct for Halifax but it certainly used to be the case (on underwriters discretion)

    Sorry for the correction Maxsteam but it is actually quite simple for once...Lenders allow any value gifted deposit as long as it is from family.

    • Post Points: 5
  •  Mon, Jul 18 2011, 5:37 PM

    Re: First Time Buyer - Gift in Kind Mortgage

    Some lenders will accept gifted deposits (Halifax?) but most will value the house at the lower of the price paid and their valuer's opinion. Your chances of persuading a lender to accept this would be increased if there were indeed £10050 being passed between bank accounts.
    • Post Points: 20
  •  Mon, Jul 18 2011, 5:14 PM

    First Time Buyer - Gift in Kind Mortgage

    Hi,

    Myself and my partner are currently looking into buying a property from family, the market value of the house is 110,000 but they are willing to sell at 99,950 could the remaining 10,050 be considered a 'gift in kind' and be used as deposit for the house?

    • Post Points: 20