Vendor gifted deposit.

emszii

I have looking on the net, and come across something called a vendor gifted deposit(not on a new build mind you). What is this, and how does it work?

No if someone is selling their house at 130k, and you get an offer accepted for say 120k, is the difference between the two figures the deposit? And does any money actually exchange hands between the seller and the mortage company, or does it work on the fact that you have managed to get the house for less than its worth, so the lenders makes money as already there is equity accrued in the property, because its selling for less than its been valued at?

Any answers are greatly appreciated :rotfl: :T
Em

HelpWhereIcan

emszii wrote:

I have looking on the net, and come across something called a vendor gifted deposit(not on a new build mind you). What is this, and how does it work?

No if someone is selling their house at 130k, and you get an offer accepted for say 120k, is the difference between the two figures the deposit?

If that is the way the sale is agreed and presented to the solicitors, yes.

emszii wrote:

And does any money actually exchange hands between the seller and the mortage company

No, in your example, your solicitor would just need to send 120k to the vendor's solicitors to complete the sale. The lender just sends your solicitor however much they have agreed to lend.

That is where the problem comes in, most lenders will not allow a vendor paid deposit in their calculations so therefore reduce the purchase price in your example to 120000 and want a deposit from you of 5% (£6000) of that plus. The lenders that will accept vendor paid deposit will generally accept no more than 5% and most will want you to match the deposit yourself. It is possible to get a 90% mortgage based on the vendor paying the 10% deposit, but your choice of lender would be very restricted and most people would be no better than if they just negotiated it as a discount off the price.

Can be done, but depends o your circumstances and any deposit you have already.

,

emszii wrote:

or does it work on the fact that you have managed to get the house for less than its worth, so the lenders makes money as already there is equity accrued in the property, because its selling for less than its been valued at?

Not really with most lenders - see above

Hope this helps

Xeno

HelpWhereIcan wrote: »

It is possible to get a 90% mortgage based on the vendor paying the 10% deposit

Who is this with? My IFA said the only one he knew of stopped doing it a few weeks ago and I could do with one lol.

herbiesjp

The gifted deposit will only work as stated above dependent on your eaxct scenario, so would be worth having a chat with a whole of market adviser as opposed to an IFA (who may only occasionally transact mortgage business and not be fully up to date with criteria)

There are some lenders that will do a gifted deposit, but only in certain circumstances

Ian_Griffiths_Halifax

It is possible to get 5% Vendor Paid Deposits through some lenders without you needing to match the gifted deposit your self.

If you can get 5% together yourself as well, then a 90% mortgage will get you much better interest rates.

wajoda2002

Hello,

We are looking into getting a 5% vendors gifted deposit already having saved 5%. Would you recommend getting a mortgage via the estate agent or with a bank? We have appointments booked with both, but I'm worried if we tell the bank we are relying on the 5% gifted that they may not want to give us a mortgage.

Thanks

Joanne :mad:

herbiesjp

wajoda2002 wrote: »

Hello,

We are looking into getting a 5% vendors gifted deposit already having saved 5%. Would you recommend getting a mortgage via the estate agent or with a bank? We have appointments booked with both, but I'm worried if we tell the bank we are relying on the 5% gifted that they may not want to give us a mortgage.

Thanks

Joanne :mad:

Your best bet would be a whole of market mortgage adviser

g_attrill

wajoda2002 wrote: »

I'm worried if we tell the bank we are relying on the 5% gifted that they may not want to give us a mortgage.

Regardless of who the mortgage is arranged through they will ask you the source of the deposit, and if it's gifted you can't say it is cash.