When to start and gifted deposits

Greavesey

The OH and I have been offered what I see as a really good deal from my Uncle. He has just renovated a house and has asked if we want to buy it. We dont have a deposit at the moment so we asked to rent instead.

He said that we could, and if we could save up a 5-10% deposit in 12 months, he would give us the rent back as a vendor gifted deposit.

We reckon that the house will be worth about £100k and we will have paid abour £5.5k rent. We could save about the same again in 12 months.

Will lenders accept this as a 10%+ deposit and if we take up tenancy in October, at what point should we get the ball rolling next year to complete in 12 months

Lots of questions I know, but any help would be much appreciated.

holly_hobby

Unfortunately Vendor gifted deposits are no longer accpeted in the mge market - Halifax the last remaining home for these, closed their acceptance in July this year.

You may qualify for a family gifted deposit (given without reservation) as it is your Uncle - or do you mean "uncle" in the term of a longstanding family friend ?

Holly

DVardysShadow

What is the trust like between you and Uncle? I think the way to do this is to call the rent £6,000, but pay £330/month [£4,000] over the 12 months. Uncle then to return £2,000 to you for your savings once you have agreed a price and to drop the price by £2,000. You will then have £10,000 approx, which will be a 10% deposit. Provided Uncle gives you £2,000 [as an unreserved gift] and it is in your savings by the time you start your mortgage application, the source of funds will be savings, so you don't need to say 'gift' for any of it. [I fully expect some of the professionals to howl a bit at this - don't disappoint me please! - it just makes the point that once you say 'gift' the professionals will make a meal of it.

nearlyrich

You may need the donor to write a letter saying it's a gift not a loan for the solicitor and the lender.

Greavesey

Holly

Thanks for your comments. He is my mother's brother. Which lenders accept family gifted deposits and will it matter that he is also the vendor?

Just when we'd thought we'd found a way to reduce the amount of time saving as well

Never mind!

holly_hobby

I am currently out of mortgage placement, but from memory Halifax and Yorkshire BS were pretty good - both accept direct business/enqs too.

As he is most def classed as close family, and also the vendor, I think this could be more accurately referred to as "family discounted purchase price" instead of a gifted deposit (he being the vendor would complicate I feel) - YBS were acceptable to this without having to put down a further deposit off the reduced purchase price.

Of course should this be the case, the property would need to value up to the assumed figs.

You could give YBS and Hallifax Mges a call, discuss your situation i.e you wish to buy your Uncles house, who has agreed to a discounted pch price/gifted deposit - and see what they come back with.

Of course, a broker would also be able to assist with this and will be aware of all current players who accept such business (check his fee).

But if you wanted to make a few general enquiries yourself, you have an idea what you need to ask (bearing in mind that for a delayed purchase by the time you get round to it their criteria may have altered - so you would need to re-validate nearer the time).

Hope this helps

Holly