vendor gifted deposit

monicamj

Hi all looking for a bit of advice please, sorry it's an essay but I thought it would be better to get the whole picture

I am trying to buy a house that has no bathroom. It was marketed at £52k, I offered £48k which was accepted. I have a mortgage in place with Yorkshire Bank that is 95% LTV. Yorkshire bank's higher lending people then said as the house has no bathroom, if I default on the mortgage and have to reposess they will not get their money back and can we put up a 10% deposit please.

I thought ok I will save up the extra and if the house is still on the market by it then (I think given some extreme money saving behaviour and some begging I can get it by february).

The estate agent have come back to us and said that the vendor will put up the extra 5% deposit if we put the price up to £51k. The house was valued at £52k, so the price isn't going to be too high.

I don't know if I'm being paranoid but this seems a little bit iffy to me! I don't want to lose the house it's a real gem but I don't want to do anything dodgy either. Is this legal and acceptable? Should I go for it?!?

Also the cost of the mortgage is £150 less a month than my rent!

Many thanks in advance.

exsquaddiegirl

I run the risk of being totally wrong here, so please take my suggestion in the spirit it's meant, and not as the gospel!

It looks to me like the vendor simply doesn't want to lose the deal. A house without a bathroom is not an easy thing to sell, your potential market is much smaller than normal.

The original purchase price agreed was £48k, 5% of which is £2,400. The new suggested price is £51,000, 5% of which is £2,550.

If the vendor paid 5% of £51,000 for you, but increased the selling price by £3,000 that would mean that the seller gets the sale, you get your mortgage, and it costs you a total of £450 more than the original deal. The seller gets that £450, but has to pay £2550 upfront. Your purchase price increases by £3k, but £2,550 of that is paid straight off your mortgage by the vendor, so you only really pay £450 more.

This looks to me like a good deal for both of you, and if I was you and wanted to buy the house, I would go for it.

I did something similar when I bought my current house, but I had the benefit of buying from a friend who I used to live in the house with.

monicamj

Thanks for doing the maths for me I'm not so good! Put like that it seems like a good idea.

shazmar

I think the first port of call is to check if the lender even accepts vendor gifted deposits.

monicamj

Checked and they are okay with it!

maninthestreet

Please let us know how the lender responds when they hear the purchase price of the house has suddenly increased by £3K - they will want to know why.

monicamj

Will do - this was one of the things I thought might be an issue!

poppy10_2

maninthestreet wrote: »

Please let us know how the lender responds when they hear the purchase price of the house has suddenly increased by £3K - they will want to know why.

Yep, can't imagine they will be happy with this

monicamj

Yorkshire Bank have not gone for this idea, they have now told me that I can't have a mortgage on the property at all because of the lack of bathroom and have advised me to find another house or mortgage provider!

poppy10_2

Thanks for the update