First time buyer

MilosMM

Dear all,

I am the first time buyer of a house and I have some very simple questions that I would appreciate help on.

1) Generally speaking, what are the initial steps? What I mean is, logically speaking I have to secure the mortgage first before I put any offer on the house. That makes sense but how much exactly I should be asking for mortgage (eg a house worth £250000 after some negotiations I can get for less maybe or I suddenly find something for £240000 that i might like)? What happens then if mortgage is accepted?

2) My mum is willing to give me deposit money as a gift. Will I need to pay the tax on the money and if not does she need to say somewhere that this is a gift? Please note that my mum is working overseas and it is not UK national

3) Do i have any benefits as a first time buyer? Ie. is there any scheme provided by the government for the first time buyers?

Any comments on the above will be highly appreciated.

Many thanks,

Milos

CLAPTON

1. you speak to a lender and ask for a AIP (agreement in principle) which basically says how much they would be prepared to lend you and under what terms (loan to value etc)

It is not binding on either party until you find a property and make a specific application.


2. there is no tax in the UK on gifts.
your lender eill want to know the source of your deposit: a gift from a close relative is usually acceptable


3. From time to time there are special deals for FTB (no stamp duty, special government loans) but at the moment I can't think of one that is specific to FTB but others may know.

ACG

You agree a purchase price before securing a mortgage - otherwise how do you know how much to apply for?

Typically the route i go with clients is:
Meet up and agree what they can afford and an amount tehy can borrow.
Let them find a property and agree a purchase price
Submit an application
Deal with the lender.

Some people prefer to do a Decision in Principle (also known as an AIP or DIP) this would be done around the time of negotiating a purchase price.

Let_Us_See

Google "buying your first home" etc. to obtain some background knowledge. Aftwerwards if there is anything you still don't understand then come back and post of this forum.

kingstreet

A gifted deposit coming from outside the UK will be an issue for some lenders and some solicitors. Deal with this upfront.

MilosMM

Thank you all for the info. Milos

lion-o

There is tax on gifts - inheritance tax on more than 3K.

MilosMM

But I heard if it is a close relative (in this case my mother) that gives you a money gift (deposit for the house) it should not be taxable? Right?

Annisele

MilosMM wrote: »

But I heard if it is a close relative (in this case my mother) that gives you a money gift (deposit for the house) it should not be taxable? Right?

There's no gift tax in the UK - but your mother isn't in the UK. You won't have to pay tax on the gift, but whether she has to pay tax depends on the tax regime where she lives.

On the inheritance tax point, if your mother was 'domiciled' in the UK, and if she died within 7 years of making the gift, then the gift might count as part of her estate for inheritance tax purposes. Since it sounds as though she's not domiciled in the UK, UK inheritance tax law is irrelevant - but inheritance tax (and other taxes) where she lives might be an issue.