Using a large gift sum for a deposit only

nemoh88

Hello, I have a tendency to waffle so I'll try to make this relatively brief.
I'm currently on a low salary of about £17k a year and, even though I've finally payed off all my debts and am slightly in the green, I haven't manage to save enough for a deposit and need to keep some money I have saved for emergencies. However, I found out that due to the money my Grandparents left me and some my Mum and Dad put aside for me I have a substantial amount of money that I could use as a gifted deposit (about 27% of the property value).

I guess my question is do banks really look down on people that are using gifted deposits as their entire deposit amount? I know that realistically I will need to be extremely careful on my current wage once I move out but I wouldn't see myself as not being able to afford to live if I did move out but I just worry my lack of actual deposit funds myself would impact how they view me. I also do plan to put everything I've got into getting a better paid job/promotion after I move out but I'm worried about doing it before hand because people say that being in a new job during a mortgage application can hurt your chances? Whereas I've been in this job for 10 years and it's relatively safe at the moment in this current climate. Any insights or info would be greatly appreciated. Thanks!

dbg1986

I know hsbc are fine , but know nationwide have just changed their criteria on 90%ltv where you need to be puttig down 75% of the deposit

nemoh88

Yeah I saw that with Nationwide which is a shame as I bank with them. I'm hoping others don't follow suit! Thanks for your reply!

davidmcn

Not sure an inheritance is viewed as a gift anyway, it's your money. 

Soot2006

davidmcn said:

Not sure an inheritance is viewed as a gift anyway, it's your money. 

^ This.  Is that money in your name in your own savings account? If not, get it there asap and don't touch it! Add to it, look after it, and in a few few months you have demonstrated that are financially responsible. It's then not a case of "I need a house so my parents gave me money" but "I inherited money which changed my financial situation so I bought a house". This obviously assumes that the  your credit score / mortgage applications / etc are problem-free.

bradders1983

Some mortgage companies are asking for written confirmation the gift is a gift and not a loan, according to some threads on here. But if it is a gift surely that is no issue. 

kingstreet

bradders1983 said:

Some mortgage companies are asking for written confirmation the gift is a gift and not a loan, according to some threads on here. But if it is a gift surely that is no issue. 

All lenders request some form of documentation for a gifted deposit. Sometimes themselves, sometimes via the solicitor acting for them.

kingstreet

nemoh88 said:

Yeah I saw that with Nationwide which is a shame as I bank with them. I'm hoping others don't follow suit! Thanks for your reply!

... but that applies only to 90% mortgages and that's not you!
davidmcn said:

Not sure an inheritance is viewed as a gift anyway, it's your money. 

An inheritance is not included in the Nationwide gift limit for 90% mortgages and in general would not be viewed as a gift at all.

nemoh88

kingstreet said:

nemoh88 said:

Yeah I saw that with Nationwide which is a shame as I bank with them. I'm hoping others don't follow suit! Thanks for your reply!

... but that applies only to 90% mortgages and that's not you!
davidmcn said:

Not sure an inheritance is viewed as a gift anyway, it's your money. 

An inheritance is not included in the Nationwide gift limit for 90% mortgages and in general would not be viewed as a gift at all.

Yeah, that is a good point but I though I saw somewhere that I'd still have to make up 75% of the deposit myself even if I have a 75% mortgage (or whatever mine would be). It's all so confusing haha. Thank you though, I'll look into it all a bit more!

nemoh88

kingstreet said:

bradders1983 said:

Some mortgage companies are asking for written confirmation the gift is a gift and not a loan, according to some threads on here. But if it is a gift surely that is no issue. 

All lenders request some form of documentation for a gifted deposit. Sometimes themselves, sometimes via the solicitor acting for them.

bradders1983 said:

Some mortgage companies are asking for written confirmation the gift is a gift and not a loan, according to some threads on here. But if it is a gift surely that is no issue. 

Yeah, I would have no issue getting a letter from my parents saying that it is a genuine gift. I've just been thinking and I guess I could also use my savings (which I was planning to save towards furnishing and emergencies/general savings) as part of the deposit and use a bit less of the gifted money. And then ask for the rest of the gifted money to pay for the furnishings after I'm in etc. I think that's quite a good idea if I do say so myself lol

Soot2006

I repeat what I say further up: get all the cash into your own savings account asap. Then it doesn't matter which "bit" of the money in there is from the inheritance or gift from your parents and which "bit" is from your prior savings. You need to explain where the money from, but it becomes exponentially less important with every passing month that it sits in your account.

Your savings are then:

- money you have actively saved over the years

- money you inherited from your grandmother

- money that was gifted by your parents (for this portion, they will need to complete a form to confirm that it is a gift not a loan).

Use what you want for the deposit; retain what you want for the future.

Don't start overcomplicating things by having your parents' bank account involved in anything. Money into your account, today.