Vendor Gift help

brassmaster

Hi,

I am currently in the process of choosing a mortgage for the purchase of a house that was on the market for 135,000 and have negotiated down to 131,000.

My partner and I have combined savings of 15,000 and have been given two options.
1)A 90% mortgage using our current savings with a purchase price of 131,000
2) An 85% mortgage using our current savings plus a 4000 vendor gift (difference between purchase price and the valued price) with a purchase price of 135,000

Using some questionable maths, I worked out that if I sell the house after three years, I would be better off with the 90% mortgage.

I would need to find some more money to contribute to the 15% deposit option but the promise of lower monthly repayments is attractive.

Does anybody have experience of vendor gifts? Are they worth it in the long run? Something is telling me that buying the house at 135,000 instead of 131,000 will backfire in the end...

:think:

jockosjungle

Not sure it'll work for you, lenders are not stupid. You can't pay more money for it then to be gifted back. Fewer lenders will consider a gifted deposit in this way so you're likely to get a worse deal.

Post Office might be your best bet

brassmaster

Hi Jockosjungle,

Thanks for the reply. Well, we've been told that this is definitely being offered. It is with the Halifax who I've heard are one of the few that offer this.

jockosjungle

Well the more you pay for the house, the less chance you have of a valuer agreeing with the valuation. Would have thought at asking price you might struggle. Personally I'd take the £131k and pay myself

R

brassmaster

The house has been valued at 135,000 (had the survey done etc) but we have agreed 131,000. In order to get the vendor gift, we need to pay for the property at it's valuation price. The difference is then given to us towards a deposit.

I want to know if there is any benefit to this over buying the house at the agreed price with our 10% deposit? Can anyone explain which is the best option and why?

Thanks!

beecher2

brassmaster wrote: »

The house has been valued at 135,000 (had the survey done etc) but we have agreed 131,000. In order to get the vendor gift, we need to pay for the property at it's valuation price. The difference is then given to us towards a deposit.

I want to know if there is any benefit to this over buying the house at the agreed price with our 10% deposit? Can anyone explain which is the best option and why?

Thanks!

What rates have you been offered for 90% and 85% LTV?

brassmaster

Hi Beecher2,

Rates are as follows:

90%: 6.79%
85%: 5.99%

Cheers

Edit: Both are fixed for three years

jockosjungle

Post Office will beat those rates on 10% for 2 years, its not really a gifted deposit is it? They're giving you back the extra you pay, thats not actually a vendor gifted deposit.

R

brassmaster

jockosjungle wrote: »

Post Office will beat those rates on 10% for 2 years, its not really a gifted deposit is it? They're giving you back the extra you pay, thats not actually a vendor gifted deposit.

R

Thanks for the info re Post Office, their rates look much better!

If it's not a gifted deposit, what is it? That's what it is being described as to us! Anyhow, regardless of what it is called, I'm interested what out of the two options I have described would be the best and why.

Thanks anyway Jockosjungle

jockosjungle

A loan? Its not a gift if you pay them the money and they give it you back

iamana1ias

Why on earth buy now if you plan to sell in 3 years?