Gifted deposits - are they legal?

poppysarah

It strikes me as very dishonest that sellers can "gift" a deposit - when in reality they're just pretending that their house is worth more ...

Is the practice legal? (Some companies seem to encourage it to enable LTV to meet the right tick boxes)

Richard_Webster

They are OK as long as they are revealed to any mortgage lender and it is still happy to proceed on the basis of the original LTV.

They are just a gimmick and should be discouraged because it was lenders encouraging this sort of practice that led to them having all the troubles they had.

brit1234

Its still legal but have to be declared to the lender otherwise it is fraud by representation on behalf of the buyer if they knowingly hide it.

Hopefully it will be outlawed in the FSA changes if they ever get published.

The whole purpose of them is to rig the land registry prices upwards so the developer can make more money. A house cost £200K with a £25k gift deposit, buyer pays £175K with the deposit but the sale is then put at £200k on the Land Registry and mortgage companies books. Then Surveyors use that sale to say all the similar type properties are currently worth £200k at this time.

Its dodgy as hell and should be banned, most banks are now wise to it and don't like them requiring bigger deposits for new builds because of them being so overvalued.

Flashmanchop

So, are gifted deposits still bad if mum and dad lend little Jenny her depsoit for her home?

**Most** banks only allow 5% from vendors, and often wont lend less then 75% onnew build

maninthestreet

Flashmanchop wrote: »

So, are gifted deposits still bad if mum and dad lend little Jenny her depsoit for her home?

No problem with those - it's real money changing hands, not the imaginary type that a vendor gifted deposit involves.

Orpheo

Vendor gifted deposits artificially inflate the recorded selling price of a property.

silvercar

All hinges on whether a surveyor is prepared to say the property is worth the inflated price. You would have thought that surveyors were being more cautious nowadays, especially given the high LTV usually associated with those getting a vendor gifted deposit.

Flashmanchop

silvercar wrote: »

All hinges on whether a surveyor is prepared to say the property is worth the inflated price. You would have thought that surveyors were being more cautious nowadays, especially given the high LTV usually associated with those getting a vendor gifted deposit.

Surveyors generally are, they are being a pain in the ar5e!!!

brit1234

business_man wrote: »

Just a quick response to your signature,

Halifax and nationwide figures are NOT acurate.

Rightmove and HMLR publishes a better estimate, based on the fact halifax and nationwide only use their mortgage figures to calculate, however HMLR and Rightmove go by the prices recorded or asking prices.

They seem correct, check the reports; :cheesy:

http://www.lloydsbankinggroup.com/media/pdfs/2011/HousePriceIndexFebruary2011.pdf

http://www.nationwide.co.uk/hpi/

:beer:

brit1234

business_man wrote: »

Reports by another bank who has nearly similar procedures for estimating firgures.

You need reality check.

Do you not like us slating gift deposit corruption or are you upset that house prices are falling.

The figures are correct or as you put it firgures

:j:j:j:j

Eton_Rifle

brit1234 wrote: »

The figures are correct or as you put it firgures

:j:j:j:j

Come on Brit, I really don't think you're in a position to hold the spelling and grammar of another poster up for ridicule!