Strange Suggestion ?

LavenderBoy

Hi Everyone

A friend said to me that she has just had an offer on her house for the full asking price but the offer is subject to her gifting the deposit to the buyer ???

Ive never heard of this before, Just she has said the buyer has not got the deposit needed for her house but can easily afford repayments etc so the offer is based on her giving the deposit to the buyer as an incentive to buy (she is keen to get rid of her house) then the buyer would use the gifted deposit to get a mortgage to buy her house for the full purchase price ?


It just sounded rather strange to me ! just wondered if anyone has heard of anything like this before?

Thanks !

tealady

Think about it. Your friend is being asked to hand over money to a stranger and they say they will then buy her house. Whats the saying "if it walks like a duck?" tell your friend to run...... as far away from this "buyer" as they can.

DVardysShadow

tealady wrote: »

Think about it. Your friend is being asked to hand over money to a stranger and they say they will then buy her house. Whats the saying "if it walks like a duck?" tell your friend to run...... as far away from this "buyer" as they can.

A 'gifted deposit' is managed by the seller's solicitor. So the prospect of the buyer doing a runner with the money does not arise. But don't be tempted to hand the deposit over to the buyer to get around the real problem:

However, it would be a bad idea to go with this buyer because without equity of their own, no mortgage lender will lend and the 'gifted deposit' will have to be declared and put back into the Loan to Value calculation, with the result that the deal will collapse. And it will take a long time to get to the point where it finally falls through

Ivana_Tinkle

DVardysShadow wrote: »

And it will take a long time to get to the point where it finally falls through

Yes, this is what happened to us, right at exchange of contracts. Don't even consider it unless you have confirmation, in writing, from the mortgage company that they're OK with it. (Our buyers told us they'd cleared it with the mortgage co and we were naive/stupid/hopeful enough to believe them.)

DannyboyMidlands

Your friend should tell the buyer and her estate agent to stop wasting her time.

If this idiot doesn't have any money why are they even viewing houses? They will never get a mortgage on this basis.

kingstreet

The last lender to accept a vendor gifted deposit, Halifax, pulled out of this market in July 2011. There is no lender prepared to accept such a transaction, so the idea is redundant.

Mumto3cheekymonkeys

Why would someone lend someone money to buy there own house? I think this is a stupid suggestion and if anyone said this to me I would laugh in there face!

kingstreet

Mumto3cheekymonkeys wrote: »

Why would someone lend someone money to buy there own house? I think this is a stupid suggestion and if anyone said this to me I would laugh in there face!

It isn't being loaned. You buy a property at the "gross" or asking price, say £130,000.

The vendor agrees to accept £123,500 of that, with £6,500 becoming the 5% deposit.

The sales memorandum and contract is worded something like "£130,000 with 5% vendor gifted deposit, leaving £123,500 to be paid."

As long as the surveyor, solicitors and lender are happy with it and the property "values up" at the asking/gross price, it is an acceptable way of purchasing. As I said, lenders no longer accept such business in the second-hand market, although the practice does continue in the newbuild sector.