Gifted deposit from sale of house we'd buy - possible?

WantToBuyAHouse

Hi Everyone,

I'm a long time user but registered in another name for anonymity, I hope that's ok.

I'm looking for some advice on what seems to be a complex situation (though I also naively think it's quite straightforward!):

My mother-in-law is looking to sell her house. My husband and I would love to buy a house, but we don't have a deposit. Calculators online show we could more than likely get a mortgage for the balance of the value of MIL's house if we had the deposit.

To throw some numbers in...MIL thinks the house is worth £213k (survey done last year), so we'd get a mortgage for £191.7k if we had a 10% deposit.

My MIL has offered to gift us the deposit from the sale of her house. As it's her house that we would be buying though, I'm not sure if this is possible?

In theory I think it is, as in my world this would happen:
1) We exchange and complete on the same day
2) Our lender would send £191.7k to MIL's representative for the purchase of her house
3) MIL would pay off her £100k o/s mortgage balance (proceeds of sale and the gifted deposit) and have £91.7k remaining
4) MIL moves in with friend (that's the plan)
5) My husband and I own the house

As we're first time buyers I'm sure I'm missing something, so if anyone could shed any light on this I'd be very grateful

Thanks for reading!

kingstreet

It's a concessionary purchase and is accepted by a couple of lenders.

Speak to a broker to establish what is possible.

amnblog

KS is correct.

You need a broker for this one, especially with no cash to put in.

WantToBuyAHouse

Thanks very much both - much appreciated!


Is there a specific website/method for finding a broker? I've read Martin's guide which recommends vouchedfor and unbiased - is there anything else other than Google?


Thanks again


ETA: One more question if I may....if the gift was a loan instead, would that be better or worse from a lender's perspective?

kingstreet

Worse.

A concessionary purchase means the house is worth a higher value and the difference between the value and the agreed price is your deposit.

It can only be done when purchasing from a close relative or as a sitting tenant.

The lender's surveyor must agree the value used is actually reasonable, or the plan will fall apart.

WantToBuyAHouse

Thanks for your help kingstreet

Now to find a broker...fun times ahead!