In recent years, we have seen a surge in first time buyers in Manchester using gifted deposits to secure their properties.
With rising property prices and increasing difficulty saving for a deposit, many first time buyers in Manchester are turning to family members for financial help.
If you’re navigating the property market, understanding the concept of gifted deposits and how they can benefit you is essential.
What Is a Gifted Deposit?
A gifted deposit is a sum of money provided by a family member or close friend to help you cover part or all of your mortgage deposit.
Unlike loans, this financial gift doesn’t need to be repaid, and the giver doesn’t gain any legal claim over the property.
This support can be crucial, particularly for first time buyers in Manchester who may struggle to save enough for a deposit while also facing rising rental costs.
Why Are Gifted Deposits Gaining Popularity?
There are several reasons why gifted deposits have become more popular in Manchester.
One key factor is the competitive housing market, where properties in desirable areas are quickly snapped up.
Having a larger deposit not only strengthens your mortgage application but also makes you more attractive to sellers, who may prefer buyers with a secure financial backing.
Additionally, Manchester’s growing economy and increased demand for housing mean that many prospective buyers are facing higher property prices than they may have anticipated.
As a result, gifted deposits are providing a vital lifeline for buyers who might otherwise struggle to save a large enough deposit.
How Does a Gifted Deposit Work?
If you’re fortunate enough to receive a gifted deposit, it’s important to understand how the process works.
The person providing the funds will need to confirm in writing that the money is a gift and that there is no expectation of repayment.
This is typically done through a gifted deposit letter, which the mortgage lender will require as part of the application process.
This document ensures there is no misunderstanding about the nature of the deposit, which helps avoid any complications further down the line.
Most lenders accept gifted deposits, but each lender may have its own specific requirements. It’s always advisable to speak with a mortgage broker in Manchester who understands local lending criteria and can guide you through the process.
Who Can Gift a Deposit?
In most cases, gifted deposits come from close family members, such as parents or grandparents.
Some mortgage lenders may also allow gifts from extended family, such as siblings or aunts and uncles. It’s important to check with your mortgage lender or mortgage broker in Manchester to understand who they will accept as a donor, as this can vary from lender to lender.
It’s common for parents to gift a deposit to help their children onto the property ladder. With property prices in popular areas such as Didsbury, Chorlton, and the Northern Quarter steadily rising, these financial contributions are often the deciding factor that allows buyers to secure their new home.
Date Last Edited: October 18, 2024
