What is the issue with gifted deposits....

posh_scouse

I have read on here lenders don't like them - why?

The only realistic chance of me (soon to be ex BR) and fianc! (ex IVA) ever getting a mortgage is a whopping great deposit. I get and understand why that is so I've no complaints.

Our choices are:

Wait until my mom dies and I inherit - his family have no equity

Or - my mom is more than willing to release equity in her owned house for us to get a deposit. I know this will give less than the house is worth but frankly (and thankfully) she shows no intention of dying soon

WE could more than afford a 100% mortgage but those days are long gone - and thankfully too - but saving a deposit on a 200K house will take years when I can get the deposit from my mom (only child so am lucky)

But for some reasons lenders don't like gifted deposits. Why?

The other option is to continue to rent - long term - which I'm more than happy to and if my land lord would commit to a long lease (see previous threads) I wouldn't be worried at all about buying since rent is cheaper than a mortgage and we are saving as we go

Valli

When a prospective buyer saves up for a deposit they are showing commitment and stability - a buyer who can lock away a chunk of money every month to save can set aside a chunk of money every month to pay a mortgage. Maybe that's why?

posh_scouse

Valli wrote: »

When a prospective buyer saves up for a deposit they are showing commitment and stability - a buyer who can lock away a chunk of money every month to save can set aside a chunk of money every month to pay a mortgage. Maybe that's why?

And what about the locking away a chunk of money to pay the rent!

Flibsey

posh_scouse wrote: »

And what about the locking away a chunk of money to pay the rent!

*high fives*

casualwalks

Well, the thing is, when you have a house, it isn't just the mortgage. If your boiler breaks, or your roof leaks and you have nothing set aside to repair it, you're in a pickle. Saving money on top of paying rent demonstrates that you will likely do the same when you have a mortgage and you will be prepare for the up keep of a house. If you have no savings, and the house falls in disrepair, or you loose your job....or a hundred other things that could happen it is more likely that you won't be able to keep up with the mortgage and there will be a repossession.

posh_scouse

casualwalks wrote: »

Well, the thing is, when you have a house, it isn't just the mortgage. If your boiler breaks, or your roof leaks and you have nothing set aside to repair it, you're in a pickle. Saving money on top of paying rent demonstrates that you will likely do the same when you have a mortgage and you will be prepare for the up keep of a house. If you have no savings, and the house falls in disrepair, or you loose your job....or a hundred other things that could happen it is more likely that you won't be able to keep up with the mortgage and there will be a repossession.

As I said, we save whilst paying rent - which is higher than the mortgage would be = that is demonstrable - I am BR but fianc! earns more than enough to cover outgoings and savings - his IVA finished last august

But to get 20K in savings would take years

I used to have a house so I know its not just the mortgage - but I still don't get why, if some monthly savings happen, but the deposit is gifted why many mortgagers say no

DRP

I'm new to this issue with gifted deposits.

How exactly would your lender know if it was gifted or if you had been saving it for months or years?

posh_scouse

DRP wrote: »

I'm new to this issue with gifted deposits.

How exactly would your lender know if it was gifted or if you had been saving it for months or years?

Seemingly its toi do with money laundering and you have to prove where the money came from.......


Sort of stops family helping family

DRP

posh_scouse wrote: »

Seemingly its toi do with money laundering and you have to prove where the money came from.......


Sort of stops family helping family

so what is needed to prove it?

ie. 100 months' statements to prove that you saved 20k at 200 quid a month?:eek:

posh_scouse

DRP wrote: »

so what is needed to prove it?

ie. 100 months' statements to prove that you saved 20k at 200 quid a month?:eek:

or your mom gave you the money - hence the family helping family - or what will happen in 30 years time

HapPea

Gifted deposits from family (parents) are not normally an issue. But your parents will need to declare that it is a gift and no repayment will be required.
Gifted deposits from a Vendor are an issue as really they are saying the property is worth £Xk less and so the LTV is really 100%. Gifted deposits from non-family are an issue as it it can hard to believe that a friend would simply give you £Xk for nothing, and so there is the risk that they will claim a stake in the house were it ever to be repossessed.

If you had bought a house 5 years ago you might have no savings but might equity which would act a the deposit. If the issue was with you having no savings (as people have said above) then surely this would still be an issue in this case.

OP - I would suggest you speak to a broker to discuss the options available to you.