Gifted Deposit Mortgage Advice in Derby
A gifted deposit is something many homebuyers have received through either a portion or a full amount of the required deposit to put forward for a property purchase. With this, an agreement needs to be in place that states that this money is a gift and not a loan.
How can gifted deposits help?
This option can be helpful if you are able to afford your monthly mortgage repayments, however, you are finding it difficult to raise money for the initial deposit which is normally at least 5%. You may find that the more gifted deposit you have available, the rates available to you could be better.
As a Mortgage Broker in Derby, gifted deposits can be helpful for individuals on a lower salary and are struggling to save up for their initial deposit, but can technically be able to afford their monthly mortgage repayments.
Who can gift the deposit?
We do find that an applicant’s parents will be the ones who will gift you a deposit. This is not just limited to birth parents, but adopted parents and, depending on the mortgage lender, carers. You might have heard this being referred to as the Bank of Mum & Dad.
There could be the option for other family members to gift a deposit, however, this all comes down to the lender. Therefore, you need to have a thorough look when finding the right one.
Do your parents know you need help?
When speaking to First Time Buyers in Derby and those looking to move house, our team found that many of them are unaware that their parents are able to help them out through the mortgage journey. More often than not, parents would be willing to help their children to achieve their homeowning goals.
It’s common for people to look into taking out a mortgage and owning a property instead of renting as buying is more prosperous and is an option that parents will usually want to financially support.
In many cases, the gifted deposit is raised through inheritance but can be through a large savings account or have released some equity from their home, they may gift this much earlier to you.
Gifted Deposit vs Loans
The majority of mortgage lenders will not accept a loan as a way to pack the deposit on your home. This is because mortgage lenders can feel uncertain as to if you can be able to afford both the mortgage loan and the personal loan at once.
The good news is that a gifted deposit isn’t a loan, it’s a gift, therefore this isn’t likely to be an issue to a mortgage lender.
Is there a maximum or minimum gifted amount?
When it comes to the amount an individual can gift you towards your deposit, some mortgage lenders may want you to put down at least 5% of the property purchase price from your own savings. This does all depend on your situation.
This means that you will have to contribute if you do have a gifted deposit. In this situation, you can use a gifted deposit to book your savings which can result in a much larger deposit which, in turn, could give you access to better loan-to-value.
Who can benefit from a gifted deposit?
The popularity of gifted deposits are generally amongst people looking at taking their first step onto the property as well as those who are moving home in Derby.
What proof is required?
In almost any situation with a gifted deposit, mortgage lenders will request a gifted deposit form. Along with this, you may need to provide additional documents, like the donors ID and sometimes their bank statements. This can provide substantial evidence of where the funds have come from.
Date Last Edited: February 20, 2024
