First time buyer

mills112

My FIL is selling his house for 185k he has a few offers, some are from first time buyers.

Most of the offers are putting down 5% deposit. This to me sounds low as I am used to people putting down the standard 10% these days.

Is 5% deposit a bit too low do you think and we are better off choosing the ones that are putting down 10% deposit?

Brie

Sounds like you're concerned about the buyer being able to afford the property. Which is very laudable of you. But once the house is sold it's between the buyer and their mortgage company whether they can afford things.

Besides there's a big difference between being able to afford mortgage payments and monthly rent payments. Many people renting struggle to save enough for a deposit and thus are paying more in rent than a mortgage might cost each month.

Frankly in the end I think a FTB is great because there isn't a chain to deal with so whomever puts in the best offer and can act the quickest is the one I'd go for.

Emmia

Are they otherwise proceedable? Do they have an agreement in principle from the bank for the value of the property?

FTBs have the advantage of no chain.

mills112

https://forums.moneysavingexpert.com/discussion/comment/81921818#Comment_81921818

the offers are all from first time buyers or they have a property but they are not selling it, so no one is in a chain. Yes, all with MIP of 185K or above.

RelievedSheff

Why is their deposit amount of any concern to you?

If they can fund the purchase what does it really matter what deposit they are putting down?

mills112

https://forums.moneysavingexpert.com/discussion/comment/81921855#Comment_81921855

if the deposit is low, it means they have less money for manouvre. if the bank decide to lend less after the valuation, they are better placed to fill the gap with the higher deposit.

they will also be able to get more preferential mortgage rates, and so make the purchase more affordable for them,

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6659548/first-time-buyer

It tends to be a bit more complex, we bought with paying a 5% deposit but were were committed to a 10% deposit, ie if something had gone wrong and completion hadn't occurred on time etc then we would still owe the other 5%

https://forums.moneysavingexpert.com/discussion/comment/81921857#Comment_81921857

Depends on the situation, for us affordability wasnt an issue, we had an agreement in principle for £300,000 more than we were asking for but were just cash poor at the time. The issue therefore wouldnt be we can't afford it but is the LTV within the acceptable range. You could equally find someone with a much lower LTV fails affordability tests, lenders can't these days just think there is enough equity to make our money back so we'll let people take loans they can't afford.

You dont say what the spread of offers are? My mother accepted a cash buyer despite it being £5k less offer hoping it would be a smoother transaction then on the day of exchange (which was also day of completion - stupid idea, wasnt mine) the buyer said they'd looked at the survey again and now dropping their offer by £15k. With all her possessions already loaded into the van she felt she had no option.

mills112

https://forums.moneysavingexpert.com/discussion/comment/81921885#Comment_81921885

they are for the asking price of 185k but some have gone above. so it is difficult to decide. i am therefore thinking about the deposit amount as a factor to help me make the decision.

Emmia

https://forums.moneysavingexpert.com/discussion/comment/81921910#Comment_81921910

Why are YOU deciding if it's your FIL selling?

mills112

https://forums.moneysavingexpert.com/discussion/comment/81921943#Comment_81921943

he is elderly so I am making decisions for him. I also have more experience at selling properties than he does.

I have decided to go for the party that has 10% deposit. They have offered the highest offer as well now so it's a no brainer. I am surprised people are still using 5% deposit as I have only seen 10% deposit, and often a lot more.

Tabieth

https://forums.moneysavingexpert.com/discussion/comment/81922063#Comment_81922063

Do you have lasting power of attorney? Many, many older people would be insulted at the thought that they can’t make their own decisions simply because of their age! Your FIL may be extremely happy with your support and advice which I am sure is kindly meant. But unless he lacks capacity it’s not your decision and his solicitor may have legal concerns about your role in this.