Seller gifting deposit to buyer?

getmeouttahere

We have received an enquiry from a prospective buyer of our house, where they have asked if they offer the full asking price, would we be willing to gift them their 5% deposit. We have said yes because this means a fair price for us after gifting the deposit and it helps a first time buyer to get a nice house. However, I'm just wondering how this would work in practice. Is there anything we need to do differently other than informing the solicitor of the deal? (We wouldn't be going through an estate agent btw as we've not yet signed a contract with any agents).

mrginge

getmeouttahere wrote: »

We have received an enquiry from a prospective buyer of our house, where they have asked if they offer the full asking price, would we be willing to gift them their 5% deposit. We have said yes because this means a fair price for us after gifting the deposit and it helps a first time buyer to get a nice house. However, I'm just wondering how this would work in practice. Is there anything we need to do differently other than informing the solicitor of the deal? (We wouldn't be going through an estate agent btw as we've not yet signed a contract with any agents).

It's not happening.
Mortgage companies do not allow vendor gifted deposits.

hazyjo

Also, when you say you haven't signed a contract with any EA - how did you buyer find your house was for sale? If any way connected to an EA (board, advert, window, client, etc), you will still owe them despite not putting actual pen to paper.

Jx

saajan_12

So effectively you are lowering the price by 5% as the best evidence for a valuation is the price you are willing to sell for. This will effectively increase the buyer's mortgage LTV by ~5%. If they 'need' you to gift them the deposit, they presumably are at their maximum LTV borrowing, so the mortgage won't lend at a higher LTV.

getmeouttahere

We have been advertising the house privately for a few days until our tenant moves out, just to gauge interest really. Have not even met with estate agents yet (although have two appointments booked). Will speak to this prospective buyer more and see what's the best way forward.

kingstreet

The last lender out of vendor gifted business was Halifax in July 2012. I've heard nothing of any lender returning to this market.

eddddy

I'd suggest the following as a starting point...

Tell the buyer to speak to a mortgage advisor, and if the advisor says they can find a lender who will offer them a 95% mortgage with a 5% vendor gifted deposit...

... or a lender who will offer them a 100% mortgage (which is essentially the same thing)...

... then continue the conversation with the buyer.

Otherwise, don't let this distract you from your selling plans.