Gifted Deposits

fivemice

Can someone tell me how this works?

I know its when the seller gives you money, generally as an incentive to buy their house, but how exactly would it work? Would they have to actually give the buyer the money in cash/cheque form?

toonfish

they usually just discount the purchase by the appropriate amount, so you don't actually pass any money over. SO for example with a £100,000 house and 5% gift you simply pay the vendor/builder £95,000.

Few lenders like vendor gifted deposits, builder deposits are more acceptable.

fivemice

Ok thanks.
We have had it suggested it by our mortgage broker. Turns out H has got a default put on his account - it doesn't come up on his credit report so we knew nothing about it. He's calling the company to question it as it was disputed in the first place.

But
I guess this would mean taking a gamble on the property actually being valued at the EA's price, especially since it hasn't sold for 4 months.

Would we be best to just try and knock the seller down as far as possible?

toonfish

it depends if you have a deposit or not. Borrowing the same amount at 95% or 100% would be cheaper to go the "gifted deposit" route. However, as I said few lenders will accept this and still expect you to come up with a deposit of your own as well.

The other way is for the vendor to literally give you the deposit, prior to exchange of contracts but this is not ideal from their point of view obviously!

fivemice

The mortgage lender has told us we can do a gifted deposit, so no worries there.

Thanks toonfish - I really appreciate your help :O)