Gifted deposits/cashback

emmagater

I need some advice regarding vendor gifted deposits/cashback....

If we wanted to buy a new build but needed some help with the deposit (as our bank needs 10-15% for a new build), we would obviously have to declare a vendor gifted deposit and this can only be up to 5%.

But what if we were to stump up the deposit via a short term options (parental loan) and the developer were to give us a % cashback following completion? Would we have to declare that?

Thanks!

Wh05apk

Most lenders require proof of deposit for first time buyers, "gifted" deposits from parents are acceptable, provided they are gifts, the parents will need to provide a letter saying it is a gift and not repayable.

bugbabe1970

My FIL gave us 25k as a deposit for our house 3 years ago. No questions asked by The Halifax when we declared it.

GMS

3 years ago was a different world for mortgages.

emmagater

That's not quite what I meant.

If we put down the deposit ourselves and got the developer to give us cashback after completion instead of a gifted deposit, would we have to declare it to the lender?

beecher2

emmagater wrote: »

That's not quite what I meant.

If we put down the deposit ourselves and got the developer to give us cashback after completion instead of a gifted deposit, would we have to declare it to the lender?

Do you mean that you'd get a loan from inlaws and pay them back from the developer's cashback? You'd still need to declare that the inlaws money was a gift and not to be paid back.

superted187

I would advise holding back and not lumbering yourself with a staggering mortgage debt just yet.

The housing market looks unstable to say the least. I would genuinely suggest waiting a year. That will give you more time to save, as well as additional living flexibility between now and home ownership.

betmunch

The Cashback will be declared to the Surveyor and he will report the situation to the lender.

The mortgage lender will then check their guidelines on how they would react to such a cashback

betmunch

And as Beecher says, if you have any strings to the gift from the in-laws then you will need to declare that on your application for the mortgage

emmagater

We already have our own home and mortgage but we really need to move due to serious lack of space. My parents/inlays aren't giving us a deposit at all.

Basically we have about a 5% deposit but the equity that was in the house is now minimal. We obviously should wait for house prices to go up a bit so we have a bit of equity but that could be years and we can't wait that long.

So the plan was to buy a new build and get a gifted deposit to help with the other 5% we need but that doesn't seem to be an easy option. So I was wondering if we could get tge developer to do a cashback incentive instead and we can find the extra 5% deposit short term, until after completion. But if we do have to declare the cashback, the lender will effectively see this as a gifted deposit anyway so it's back to the same position. I just wanted to know if there was any way around that issue

Wh05apk

The solicitor also has to confirm the source of the deposit, which unless funded solely by the purchasor, they have to confirm with the lender before proceeding.