Partially gifted mortgage deposit (FTB)

Hi everyone, first time poster.

I've been asking around on this and have heard a variety of very different answers, so I figure that a few more won't hurt.

My fiance and I are looking to buy our first home this year. We have £25,000 between us. We set ourselves a budget of £250,000 and actually offered on a house on Friday.

I've spoken with three brokers and my own bank, NatWest. All of them were able to provide generic 'decisions in principle' way in excess of £250,000.

One of our brokers told us he'd check on a more specific agreement in principle with Nationwide. Unfortunately, he told us that at 10% they declined the application. He asked if we could stretch to 15% and borrow only £212500 rather than £225000. Apparently this product is at around 2%, fixed for two years.

My fiance's grandmother is German and lives over there. German bank account. She's more than willing to gift us the £12,500 or so needed to hit 15%. We know that foreign gifts require a paper trail. For Nationwide, a gift over £10,000 from the EU/EEA requires the donor to provide bank statements for the past three months.

To keep a long story short, the grandmother is willing to provide evidence of her bank balance over time and confirmation of the income she received from selling her house a couple of years ago.

She is completely aghast at the idea of strangers, or indeed her close family, seeing full bank statements. I am completely confident that she is not some sort of undercover crime kingpin and that it's a cultural/personal thing for her. It's a problem to the extent that when we explained to her that this could derail our entire move (worst case potentially being next year when it's no longer a gift), she said "so be it."

We can probably go ahead and get by without this gift and take the hit with a higher fixed APR. It would however make life much easier if we could use the extra money - it would be a genuine gift which would save us a lot of money in the short and long term.

Stemming from this, I have a couple of questions I'd love some input on.

1. Based on this information, is the money from Germany a non-starter?
2. We gave the broker a basic budget and breakdown of what we were looking for. I understand that one of last week's searches for an AIP was a hard search. Given that we may need to reassess and look to borrow £225,000 (10% deposit), how much leeway do we have in terms of continuing to look for options?

Thanks in advance!