When you are a First Time Buyer and are struggling to save up for your deposit, sometimes a little help is needed to give you a financial boost. More often than not, this assistance comes in the form of a gifted deposit.
Gifted deposits are simply when a family member or friend give you a sum of money to use towards your deposit. It could be the whole of the deposit or just a small portion of it. Usually, it’s First Time Buyers that receive gifted deposits, however, we’ve also seen people moving home and still receiving a gifted deposit.
The person who is providing the gift will have to prove where the funds have come from and sign to say that it is a loan and not a gift. Lenders rarely let you use a loan for your deposit as you are technically borrowing 100% of your mortgage. Even if you are borrowing from a family, it’s still payments going out each month to pay them back.
Gifted Deposits can be incredibly helpful, especially if you are a First Time Buyers in Leeds. As a Mortgage Broker in Leeds, we’ve seen Gifted Deposits actually put people way above the usual 5% minimum deposit. This is because they’ve already had some sort of deposit in place, so they combine the two and make up a deposit greater than 5%.
It can be a challenge to save up for a deposit, especially if you are looking at buying a larger home. As mentioned before, you will usually only need a 5% deposit, although this can change depending on your lender and how the economy is performing. This is why having a family or friend to step in and help is extremely helpful.
They can put you in a great position when it comes to negotiating prices. If you have a little bit of extra cash, you may be able to get a better property or put in a higher offer to increase your chances of getting the property. As long as you don’t go too high you should be okay; you don’t want to have a property valuation carried out only for it to be downvalued.