Vendor (Who is a friend) gifted deposit in 2017

Lazos

Hi,

Today I have been discussing mortgages with a colleague of mine who recently moved into their first home. They told me that they purchased the property from a friend (not family) of theirs and managed to get a good deal not only on the property itself but also on the mortgage (cashback, gift hamper, free surveying and no solicitors fees?!?)

The friend sold the house to them with a 'gift of deposit' of 10% which was actually just a 10% discount although they did also contributed a 5% deposit of their own. This was taken forward by their broker who managed to find them a lender willing to offer them a mortgage (including the above described extras) significantly out quoting an offer in priniciple they already had from TSB.

I am in a position where a friend of mine is wanting me to purchase a house that they currently let out (not to myself) so that I can be nearer to them. I have no deposit at all. My understanding of my colleagues scenario is that he effectively got a vendor gifted deposit (which I didn't believe happened anymore) and/or it was a friend gifted deposit (which doesn't really happen anymore if they're not family?) but no actual cash changed hands as the discount/gift was on paper only?

Is anyone aware if vendor gifted deposits are creeping back?
Can they be up to 10% If they are back?
Do vendor gifted deposits change if the vendor is a friend?
Do they change if it is a vendor gifted deposit but you happen to already have a 5% deposit?

glosoli

Not had any experience of it unless the person selling the house is an immediate family member.

Is it possible the person selling the property to your friend simply reduced the purchase price by 10%, and they put down a 5% deposit of the reduced purchase price, and obtained a regular 95% mortgage?

Lazos

From clarifying with my colleague a few hours later they said specifically that their friend reduced it as a "gift of deposit" allowing them to have a total of 15% deposit.

As far as I am aware his AIP with TSB was for the REDUCED price with his £x deposit. He then went to the broker who, to what I understand, got him the best deal at the FULL price (with the gifted deposit and his own deposit)

ACG

I have never done a vendor gifted deposit where it was not a relative but I have come across a couple of lenders who say they would do it.

So I believe it can be done, but I have no first hand experience of doing it.

Lazos

In those where family are acting as vendor, did the buyer still need a deposit of their own?

ACG

No, the gift was enough. Just bare in mind the value will go off what the surveyor says the property is worth.