'Deposit Paid' offers

greengrape

Hi there!

Im new to the forums of this site, but not the actual site (it's amazing!) and have a question! Please forgive me if it has been posted previously but I have scanned and scanned and not seen the same query!

Im 22 and currently in the VERY early days of saving for a deposit, having just graduated from university last year and starting a full time marketing job 3 months ago.

I am already feeling the pressure to buy as my family and partners family keep reminding us we are throwing our money away renting (I personally feel as we are young and happy and STILL saving, for them to leave us be - but thats another issue! lol)

However after a he said, she said style debate earlier this morning about people having their deposits paid by the estate agent (or something along those lines) my arguement was if it sounds too good to be true it always is, but my OH's family claim its easily done and with few drawbacks!

Does anyone know anything about this and what the actual offers are - I.e. theres no way you'd get a 20k deposit paid for just because - I'm interested in the true story behind it.

Any help or knowledge is most appreciated!

Thanks

Annisele

A couple of years ago your OH's family would have been right, but times have changed.

It works a bit like this (with figures chosen for ease rather than realism):

• Housebuilder builds a house, and says it is worth £100k.
• Housebuilder offers to pay a £10k deposit for the buyer (i.e. 10%).
• The house is only really worth £90k (which is why the housebuilder is prepared to knock £10k off his original price of £100k)
• The potential lender comes along and values the house at £90k.

That means that if you want to buy for £100k, taking advantage of the £10k 'gifted deposit', you're still going to have to come up with a deposit of 10% of the lender's valuation, or £9k.

So - you might as well have just valued the thing at £90k in the first place.