When it comes to buying your first home, it can be difficult to work out how much it’s all going to cost. Whether it’s the actual cost of the property, arrangement fees or deposit size, you’re going to have to think about everything that comes with buying a home.
You will need to put down a deposit to get a mortgage. There are many different ways to make up your mortgage deposit, such as utilising one of the Help to Buy schemes, using a gifted deposit or just simply saving up. It’s up to you how you make up your deposit, however, it must be fully evidenced.
Gifted deposits are one of the most popular forms of deposit for a First Time Buyer in Manchester. If you’re buying a property for the first time, this may what you need to help you get onto the property ladder.
A gifted deposit is a lump sum that is gifted to you to cover or make up some of your mortgage deposit. Gifted deposits are not loans, they’re strictly gifts that don’t need to be repaid.
Your gifters will need to sign an agreement that you don’t need to repay the money.
Gifted deposits help when you’re struggling to save up for a mortgage deposit. You may be able to afford your monthly repayments, but the initial deposit is just that little bit too much.
If you receive a gifted deposit, combining it with some of your savings will raise your deposit even further, possibly allowing you to get above the minimum deposit percentage. This minimum is usually around 5%, therefore you could pass this threshold and roughly get to 7%.
Occasionally, gifted deposits can open you up to better rates from lenders, which can help if you’re on a lower salary.
Usually, it’s the applicant’s parents that gift the deposit. This can be both birth and adopted parents. On the rare occasion, you may also see a friend of the applicant offer a gifted deposit.
Depending on the lender, there may be some limitations to who can and who can’t give you a gifted deposit. For further Mortgage Advice in Manchester in this area, feel free to get in touch with our fantastic team.
As a Mortgage Broker in Manchester, we always find that applicants aren’t even aware of gifted deposits and even more so, that the parents don’t think that they can help them out.
The majority of the time, parents are eager to help out their children get onto the property ladder. Sometimes, it may do no harm to ask!
Statistically, taking out a mortgage is better than renting, due to you being able to potentially pay less per month. The deposit can often come from inheritance, although parents have been known to gift it earlier on in life if they already have enough saved or have released a certain amount of equity from their own property.
Most lenders hate accepting loans as your deposit, as you’re essentially paying off two sets of large loans and are borrowing 100% of your mortgage.
You won’t be paying off your gifted deposit as it’s been gifted to you, not loaned.
There’s no limit to the amount that you can receive as a gifted deposit. We see that most people gift between the 3%-5% mark.
If you are a First Time Buyer in Manchester or Moving Home in Manchester, a gifted deposit will massively benefit you. It can also be useful when in conjunction with a Help to Buy in Manchester, as the required 5% deposit, depending on the lender, can be paid via gifted deposit.
You will need to provide evidence of where you got your gifted deposit from and where the person gifted you got it from.
Proving your gifted deposit is also much easier if you leave the proceeding within the gifter’s account. Then once you progress through your mortgage application, your Mortgage Advisor in Manchester will help you evidence this as a gifted deposit.