Give the gift of a deposit this Christmas!
What is a gifted deposit?
A gifted deposit is a sum of money that is given by somebody, usually a family member, which forms all or part of a deposit for someone buying a property.
What do you need to know?
- It is important to remember that if you gift a deposit, it is just that, a gift. This means you will be required to sign a written declaration that states it is a gift and that the home buyer is not required to pay it back.
- If you plan to give a gifted deposit you should seek independent advice to ensure you understand you will not have an interest in the property or the right to get your money back.
- Most lenders will accept gifted deposits from close family members and a few will even accept gifted deposits from more distant relatives and friends.
- The lender or solicitor may request to see a bank statement or other documentation to evidence where the gifted deposit has originated from.
- A gifted deposit can be used alongside the applicant’s own savings or the Help to Buy scheme.
What are the alternatives to gifting a deposit?
There are many other ways parents can support their children when purchasing their first home and different ways borrowers can maximise their savings for their deposit.
- Low-deposit mortgages – the availability of products that offer a 95% or 90% LTV has substantially increased. This means that mortgages are now more accessible for buyers with smaller deposits.
- Guarantor mortgages – parents can be named on the mortgage to enhance the affordability for the first time buyer. They can also offset their savings or even take out a joint mortgage with their children.
- Government schemes – if the buyer can’t be helped by their family, government schemes such as Help to Buy or Shared Ownership could be good options.
- Help to Buy ISA – as well as the government schemes listed above, a Help to Buy ISA could assist the buyer in saving a larger deposit. The Help to Buy ISA provides a 25% bonus to first time buyers on a limited amount of savings when it is being used to purchase a house.
If you would like more information about giving a gifted deposit or other options for first time buyers then speak to our adviser today.
mark@hhhmortgages.com
01453 887179
