Gone are the days of 100% mortgages and the infamous Credit Crunch is now firmly in the past. Whilst the market has gotten stricter with rules (rightfully and understandably so), thus making it harder than it used to be to obtain a mortgage, it can still be possible in certain circumstances to buy a property without investing too much of your own money.
Buying a property under a Right-to-Buy Scheme in Leeds is one example, wherein after a specific tenancy length, you can become eligible for the Right-to-Buy your rental property from the local authority, be that a housing association or council. In a lot of cases, they may choose to use the equity from that property in place of a deposit.
In most cases though, we find that people get around the long and stressful process of saving up for their deposit, by being given a Gifted Deposit. This works exactly as you may imagine, with someone else being able to gift you either a portion of, or your entire deposit for a property.
Generally speaking, Gifted Deposits tend to come from what is known as the “Bank of Mum and Dad”, wherein as you might have guessed, parents (including adoptive parents, carers and legal guardians) are an acceptable source of a Gifted Deposit. Depending on the lender and criteria in place, this can also be accepted if it is a gift from Grandparents, Aunties & Uncles, and sometimes even family friends. The gift must be evidenced through the demonstration of bank statements from the donor and their ID.
In the majority of circumstances it will need to be a gift, with the lender requiring that the donor sign a letter (which we can help prepare) to confirm the funds are non-refundable, and they will not put a “charge” on the property you are buying. There are exceptions out there, with at least one notable lender who will accept this.
That being said, you must be careful, as taking out a personal loan just before applying for a mortgage will most likely negatively affect your credit score, which could lead to a mortgage application being rejected. Also, the monthly payments for the loan will have to be taken into account by the mortgage lender when they are calculating how much they will lend you.
There is no maximum limit on the amount of gift you can receive although a handful of lenders will insist you put in at least 5% deposit from your own funds.
As a knowledgeable and experienced Mortgage Broker in Leeds, we are able to look through 1000’s of Right-to-Buy Mortgage deals for you, tailored to your circumstances.
Throughout the whole process, we aim to offer a multitude of help and guidance, answering any questions you may have along the way. We even aid with other services when necessary, such as conveyancing.
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