Gifted Deposit

Axel132132_2

Hi,

I have lived In my home now next to my neighbours for 5 years, there daughter has come to buy my house but has asked if I can gift her the deposit.

The house is worth 125000 and has been on market for 130000 just for slow sale. She is going to buy it for 130000. Then has asked if I can gift her part of the deposit. She has about £3000 so will need £3500 roughly give or take.

What's the best way to go around this because I read that you cant gift the buyer the deposit. But what if I was to give the money to my neighbour as a gift and them to then gift it to their daughter?

Would that work? Or my neighbour did my driveway for me for free, so I could then 'pay' him for doing my driveway and he could then use that money to gift to his daughter

Just wondering the best way around it all to do it as she really wants to buy the house and be next to her parents.

Thanks alot
Axel

davidmcn

The jargon you're looking for is "concessionary purchase" - and isn't usually allowed other than where there's some connection between the parties e.g. buying from a family member or landlord. No, you can't "get round it" by giving her the cash or dressing it up as something else. She'll need to get the money from somewhere else.

Axel132132_2

I know it is what it is, but I dont really understand as to why it's not allowed to help first time buyers, as long as the bank values the property accordingly to what it sells at I cant see why they dont allow it.

Same was with help to buy other day a bank said they cant accept help to buy if the builder is offering incentives. All makes no sense!

davidmcn

Axel132132 wrote: »

I know it is what it is, but I dont really understand as to why it's not allowed to help first time buyers, as long as the bank values the property accordingly to what it sells at I cant see why they dont allow it.

Because banks have decided it's too much risk to offer any more than 95% LTV mortgages, and what you're talking about is in reality a 97.6% mortgage dressed up differently (or if the bank's valuer decides it really is worth only £125k, a 98.8% mortgage).

gaz_moose

does she know she will end up paying about £2500 in associated fee's, solicitors/setup fees/ surveys etc..

cant her parents lend her some money?

Kentish_Dave

Banks want someone to have “skin in the game”, and people don’t feel like or act like tat’s the case if they’ve not put up some of the money themselves, and they feel it more if they have put more in.

kingstreet

Vendor gifted deposit business ceased in July 2012 when Halifax was last out.

The only options this applies to today are builder deposits and concessionary purchase from landlord or blood relative as davidmcn said earlier.

scholesfan88

You'll land yourself in a heap of bother if you press ahead this way and the solicitors trace back the source of funds.