Advice plz...Deposit for new mortgage

Funky0803

Hi all,
Me and my wife are looking to buy our first home.

There is little chance of us being able to save a deposit as this could take years. My parents have decided to sell up and have offered the house to us. Being the great parents they are, they have agreed that they would pay the deposit for us.

My question is, is this possible and if so how would it work? Me and my wife wouldn't be able to front any money other than legal fees so i don't want to get to excited just yet.

Thanks

McKneff

You really need to speak to a solicitor, I think the phrase 'gifted deposit' comes into it. I cant see that it would be a problem
apart from if your parents would require means tested benefits/care home fees etc in the next 7 years or so. Deprivation of Capitol springs to mind.
and of course there may be issues down the line if you split up and the OH wants half of the house.

A solicitor is the best way.

Funky0803

With house prices falling this is obviously a great time to buy... if you can get a mortgage that is.
I can understand 100% mortgages maybe a thing of the past but surely dropping deposits to 5% or maybe even 3% would be benifcial to buyers (particularly first time) and not be to much of a risk to banks?

Forgive my ignorance if i'm way of base, I just don't understand why it has to be so difficult, me and my wife are perfectly capable of sustaining a mortgage but instead because of the deposit situation we are forced to pay dead money renting a property.
What's the chances of the banks min 10% deposit changing or is this just the way it's going to be?

opinions4u

Funky0803 wrote: »

With house prices falling this is obviously a great time to buy...

Unless they fall further.

I can understand 100% mortgages maybe a thing of the past but surely dropping deposits to 5% or maybe even 3% would be benifcial to buyers (particularly first time) and not be to much of a risk to banks?

Unless house prices fall further.

Forgive my ignorance if i'm way of base, I just don't understand why it has to be so difficult, me and my wife are perfectly capable of sustaining a mortgage but instead because of the deposit situation we are forced to pay dead money renting a property.

That money is more alive than being in a negative equity position. Would you really prefer to pay a mortgage payment and see your property lose £1,000 a month in value as well?

What's the chances of the banks min 10% deposit changing or is this just the way it's going to be?

Yorkshire Bank. Clydesdale. Nottingham Building Society. All dipping their toes in with 95% mortgages.

But I don't think it's unreasonable to ask somebody to fund 10% of their own house purchase.

Not saying I think prices will fall further, but here's a link that suggest some think they might.

boldilocks

You will need a 15% deposit to get a decent rate, lenders price for risk so the less deposit the higher the rate. have a chat with a mortgage broker, and make sure that you don't pay a fee.

A gift from your parents to fund the deposit shouldn't be an issue, the lender will need a letter from them to confirm that it is non-repayable gift and you won't be paying them any interest.

sophievenusdoom

We have recently completed on our first house purchase of which my parents helped us out with the deposit. The mortgage lender will usually ask for them to confirm if they have any hold over the property as a result of the "loan". All my mum had to do was confirm in writing that this wasn't the case, and The Halifax were happy to proceed on this basis. Hope this helps, and good luck

TrickyDicky

Funky0803 wrote: »

Forgive my ignorance if i'm way of base, I just don't understand why it has to be so difficult, me and my wife are perfectly capable of sustaining a mortgage but instead because of the deposit situation we are forced to pay dead money renting a property.

Whether you can sustain a mortgage is the lender's call to make, not yours. They have to consider rate rises, children, bills, credit cards and any other random spending when they determine if you can afford it. For all they know, you could get the mortgage day 1, and on day 2 go and max your credit cards and suddenly you're on the DFW boards because you only have 2p per month left to buy food.

Also, renting is not dead money. When will people get over this idea? renting is a place to live with a 6/12 month commitment rather than 25 years, no boiler to replace, any damage is repair, no buildings insurance to pay for, no subsidance to worry about etc etc. If you cant rent and save a deposit then you cannot afford a mortgage for a similar property.

Owning a house is a priviledge, not a right!

Funky0803

opinions4u wrote: »

But I don't think it's unreasonable to ask somebody to fund 10% of their own house purchase.

It's not that i don't think it's unreasonable, i think it's almost impossible.
Both me and my wife are in well paid jobs for the area we live in. By well paid i mean we are still below national average but above average for where we live. We rent our home at the moment, the rent of which is on a par with the NATIONAL average (bare in mind this is being paid with a below NATIONAL average wage) So this instantly cuts into our saving power.

The avergage cost of a property in our area is £120k which means a £12k min deposit.
We have just paid for our wedding which was £10k (this took 3 years of putting our life on hold and was on a shoe string budget) Add in the cost of living ie extremly high council tax p/m, stupidly high gas bills etc... you start to get a picture that saving a "reasonable" deposit is almost impossible to do, short of not living a life for the next 5+ years.

It's easy for for those people who are loaded or people who got on the property ladder 5+ years ago to say that it's a reasonable request to fund 10%.
I say - Try starting again and see how easy and how reasonable you find it now.

Funky0803

TrickyDicky wrote: »

If you cant rent and save a deposit then you cannot afford a mortgage for a similar property.

Owning a house is a priviledge, not a right!

Well you must be a rich person then.

If was to buy my parents house from them it would cost me less a month to pay the mortgage than pay the rent on the smaller property we live in now and also the house we are buying is worth more than where we live now... so how does your theory work again???

Oh, and FYI we both have gleaming credit records, this is because we work hard and don't live off credit cards and loans... we paid for our wedding ourselves with no help from any where and it was painful... so don't tell me i can't afford a mortgage - it's the deposit thats the issue nothing else!!

luckyfool

If buying from your parents then you can purchase the property at undervalue and the difference can be used as a deposit with some lenders. As has been intimated earlier, 15% would be needed to get an attractive rate, but 90% may be possible.

sophievenusdoom

Also, renting is not dead money. When will people get over this idea? renting is a place to live with a 6/12 month commitment rather than 25 years, no boiler to replace, any damage is repair, no buildings insurance to pay for, no subsidance to worry about etc etc. If you cant rent and save a deposit then you cannot afford a mortgage for a similar property.

Owning a house is a priviledge, not a right!

Disagree with this. We rented for 2.5 years before buying our own house. We have meagre incomes of approx £35k between us. We were paying £675 a month in rent on top of all the other bills and CSA there is no way we could have afforded to save for a deposit as well! We ended up getting help with our deposit and buying a slightly smaller house than we were renting. Surely this is not an idea for "people to get over", but more of a case of personal opinion? Plus, I like the idea of being able to do whatever I want with the house, and being able to see a return on any investment I make in it, not only that, but the idea is that after 30 years the house will be mine!!