We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
PLEASE READ BEFORE POSTING: Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.
We're aware that some users are experiencing technical issues which the team are working to resolve. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Sellers should avoid Cashbacks and Gifted Deposits
Options
Richard_Webster
Posts: 7,646 Forumite
You can't fool a lender into giving your buyer a higher loan to value ratio mortgage by making a "gift" of or paying a 5-10% deposit.
Buyer's solicitor will have to tell lender about it, otherwise it's mortgage fraud.
Until recently some lenders would accept this kind of thing because they wanted the business, particularly with newbuilds. Doubtful if they will still do it. They will simply downvalue the property accordingly and offer a smaller loan based on the true LTV ratio. So don't waste time on these schemes.
I've put up this post so I can keep referring back to it every time this idea gets mentioned!
Buyer's solicitor will have to tell lender about it, otherwise it's mortgage fraud.
Until recently some lenders would accept this kind of thing because they wanted the business, particularly with newbuilds. Doubtful if they will still do it. They will simply downvalue the property accordingly and offer a smaller loan based on the true LTV ratio. So don't waste time on these schemes.
I've put up this post so I can keep referring back to it every time this idea gets mentioned!
RICHARD WEBSTER
As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.
As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.
0
Comments
-
I remember Free Holidays & Cars being offered during the last house price fall!0
-
Free cars here! It's a Ford Focus free with every house sold!
At least it's only an incentive not a mortgage fraud like a 'gifted deposit' bung (but I suppose you could sell it immediately to get cash to repay the unsecured loan you took out to pay the deposit. This is getting too complex.)0 -
Of course for someone like myself who already has a 10% deposit a gifted deposit equates to cash off (unless going over Stamp Duty of course)
Nice......0 -
Of course for someone like myself who already has a 10% deposit a gifted deposit equates to cash off (unless going over Stamp Duty of course)
Nice......
Not at all. These gift deposits are actually factored into the price. You are actually buy a more overvalued property than the norm.
In other words you have been sucker punched.:exclamati:exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.
Save our Savers
0 -
Free cars here! It's a Ford Focus free with every house sold!
At least it's only an incentive not a mortgage fraud like a 'gifted deposit' bung (but I suppose you could sell it immediately to get cash to repay the unsecured loan you took out to pay the deposit. This is getting too complex.)
It would be quite ironic if in 2 years the focus is worth more than the house..0 -
The way things are going there will be bogof deals on houses.0
-
Not at all. These gift deposits are actually factored into the price. You are actually buy a more overvalued property than the norm.
In other words you have been sucker punched.:exclamati
I agree if they put the price up but a lot of sellers are offering them after the house has been on the market for a while.
Knock 20k of the price or gift it to me as a deposit Makes no odds to me.
Obviously if the house is listed at 200k then goes up to 220k with gifted 10% its no good but around my way prices are dropping or being kept the same with deposit added as sweetener:D0 -
Knock 20k of the price or gift it to me as a deposit Makes no odds to me.
I am not sure people are getting my point.
From the buyer's point of view a £220K purchase with 10% deposit paid is the same as a £198K purchase in that in the end he has to find the same amount - apart from the SDLT which would be £2200 instead of £1980. Seller gets £198K either way.
Trouble is that estate agents and brokers try to be clever by telling the buyer he can get a mortgage for 90% of £220K - that's the reason they are doing gifted deposits - so the buyer can try to get what is in effect a 100% mortgage. As long as the buyer doesn't think he can get that £198K mortgage it doesn't matter which way it is done - and if I were the buyer I would rather have the price reduced - less SDLT!RICHARD WEBSTER
As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.0 -
Richard_Webster wrote: »
I've put up this post so I can keep referring back to it every time this idea gets mentioned!
For the same reason it's worth pointing out again that although the £22,000 is a notional gift, it's not so notional to the Inland Revenue. It's unearned income that will be liable to tax at the buyers highest rate.
I don't know how hard the IR chase these cases but have heard apocryphal stories of buyers getting an unpleasant surprise after the purchase. These could be just 'pub talk' but it's another reason to avoid these schemes.0 -
Doesn't the CML handbook say something like the lender only has to be informed if the deposit paid is more 5% or £5k?
I was involved in a sale a few months back, the buyer approached the seller independently and they agreed to re-structure the deal with a 10% gifted deposit on a BTL mortgage, so the buyer only had to put down 5%. The purchase price was increased to accommodate this. We wrote to the solicitors involved outlining everything & spoke to the broker at the high street lender as to what had gone on. The broker said she was aware of the price had been changed, the solicitors had confirmation from the lender that they were happy to proceed with the full knowledge that the price had been changed & the buyer didn't meet their criteria. Buyer was cocky as hell on the day of completion.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 350.6K Banking & Borrowing
- 253K Reduce Debt & Boost Income
- 453.4K Spending & Discounts
- 243.6K Work, Benefits & Business
- 598.4K Mortgages, Homes & Bills
- 176.8K Life & Family
- 256.8K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards