Paying the deposit for a buyer

blt

Hello,

I wondered if someone could explain this a little better than my EA!

Basically, my house has been on the market for 6 months now. First estate agent totally useless - awful pictures, little advice on selling etc.

Now it's with a better agent who really seem to know their stuff, have open house days, better photos, on right move etc.

It's on the market for £105k but the sticking point seems to be the low incomes in the area meaning people are really struggling to get a deposit together. The EA has suggested that instead of dropping the price to £110k as I suggested, that they market it as £105k with a 5% deposit paid.

I said that I didn't have £5000 to give someone and they told me that this money wouldn't be "payable" until the sale went through, so in effect it was just like reducing but it means that they can cobble their deposit together.

I am very confused.....we desperately need to sell to pay for medical treatment which the NHS will not fund (too expensive, new drugs etc etc).

Any guidance or advice gratefully received. Thanks guys

<sebb>

It's often called a gifted deposit and used to be very common. Lenders are now wise to it, and most won't allow it. The buyer would need to declare it to the mortgage lender otherwise it's mortgage fraud.

The few lenders that will allow it, usually only allow a small amount (say 5%) and the buyers still need to have a decent deposit of their own.

I can't really see it helping your situation much tbh.

blt

Thanks for your reply. The estate agent said that Halifax (I think that's the one they emailed me about) are introducing a new mortgage product for FTB which has something to do with it?

brit1234

As a FTB I would rather have the 5% off. I wouldn't touch a gifted deposit property and niether will banks if they found out, it is added risk to them.

Drop your price and they will need a smaller deposit. The longer you wait the more you will chase the market down with the continual price falls.

DVardysShadow

<sebb> wrote: »

It's often called a gifted deposit and used to be very common. Lenders are now wise to it, and most won't allow it. The buyer would need to declare it to the mortgage lender otherwise it's mortgage fraud.

The few lenders that will allow it, usually only allow a small amount (say 5%) and the buyers still need to have a decent deposit of their own.

I can't really see it helping your situation much tbh.

It is not so much that lenders will not allow it. It is more the case that if there is a 'gifted deposit', they knock it straight off the value. The distinction is important if anyone thinks they are in luck because the lender allows it. So a house with an agreed gifted deposit of £5000 and a price of £100000 will be valued at £95000. And the Loan to Value will be calculated on £95000.

These days there is just no point to doing it and I would not rate an agent who suggested it very highly, either.