Vendor Paid Deposit

neverdespairgirl

ljp507 wrote: »

Thanks for the info so far... this has turned out to be quite frustrating!

I don't really understand why lenders don't like the vendor gifting a deposit, especially when the house price is low (in this case under 100,000) and aimed at first time buyers. I get that they don't want inflated house prices but i still don't understand why they're so unhappy about it.

Because the house is only actually worth what you are paying for it. If it was really worth £5k more, the vendor would sell it to someone else for £5k more.

kingstreet

Halifax is pulling vendor gifted business on 25 July. Just got an email. Someone was obviously in the know.

R6Nick

ljp507 wrote: »

Thanks for this Nick. Spoke to Halifax yesterday and they were very good with it all. The advisor I spoke to said that they cap the vendor deposit at 5% (as said on here) but that they wouldn't have a problem accepting it. The rates advertised weren't much different to HSBC from what I can recall, but would probably be improved by a broker (?)

However, I'm still a bit concerned that as the surveryor knows this when they go to value the house, it will be reflected in the price.

Well why dont you use a broker who has a good relationship with the surveyor...if they know the house has to be valued at a certain sum im sure they will heklp (within reason) ...a few thousand wont make a difference to them, but could make or break the deal on the house? Good luck though, hope you get it.

Nick

R6Nick

kingstreet wrote: »

Halifax is pulling vendor gifted business on 25 July. Just got an email. Someone was obviously in the know.

Ah ok now im worried, we've concluded and had full offer of mortgage through...but arent due to move for a few weeks and solicitor wont have requested money from Halifax yet. Is this just for new applicants or people without full offer? Or will those like me who arent in receipt of the mortgage (albeint have the offer of one) lose out too?

Nick

kingstreet

New applications are being accepted upto 25 July, so you'll be fine.

R6Nick

Thanks, just saw your signature so thats very reassuring...i love these forums!

kingstreet

Text of email for info;-

Important changes to Vendor Gifted Deposits

With effect from close of business on the 25th July Halifax Intermediaries will no longer accept applications which contain an element of Vendor Gifted Deposit (VGD) from private sellers.

This change will affect buyers who are receiving a cash incentive from a private vendor who is selling their property.

There is no change for customers who are receiving gifted deposits to purchase new build properties from either a professional property developer or builder i.e. 'Builder Gifted Deposit' (BGD). In line with the current policy Builder Gifted deposits will still be acceptable up to the value of 5% where a disclosure of incentives form is completed.

There is no change in policy for buyers who receive a deposit from a close family member and these will still be permissible.

Why are we making these changes?

With a vendor offering a deposit as a gift, the true purchase price and valuation of the property may be distorted. This results in the incorrect LTV being calculated, which in turn could result in customers being offered incorrect products.

When does this change take effect?

Applications received before close of business on Monday 25th July will still be honoured under the current policy. After this date borrowers will no longer be able to include Vendor Gifted Deposits as part of their mortgage application.

ljp507

oh... darn it.

R6Nick

Cant you just apply for it before then? Get in there bere it stops?

kingstreet

Imagine you're a mortgage lender. Hypothetically, of course.

Let's say you accept mortgage business from an (hypothetical) estate agency on the proviso that the estate agency's (hypothetical) survey arm is contracted to carry out your valuation for mortgage purposes.

Would you want to leave any areas where the hypothetical agent and hypothetical surveyor could take advantage of that area to assist them in securing business which may later prove to be to your detriment?

Exactly.