Through our extensive experience as a trusted mortgage broker in Liverpool, our team understand that a big hurdle in getting onto the property ladder for a first time buyer in Liverpool is to build up enough savings for a deposit.
In many cases, parents, grandparents and sometimes friends will want to help you towards achieving your goal of buying your first home. This will be done by providing either a percentage or the full amount of a deposit to put forward on a property. A situation like this is referred to as a gifted deposit. Find out more information on this below.
A gifted deposit is a lump sum of money provided by parents, grandparents or friends to a homebuyer and would make up the full or partial amount of the homebuyer’s required deposit. This can be a beneficial option for those struggling to save for a deposit.
Keep in mind that the money isn’t a loan and providing a gifted deposit is giving to the homebuyers with an understanding that the money doesn’t need to be repaid.
As mentioned, gifted deposit can be a helpful option for first time buyers in Liverpool especially those who are financially stable to cover mortgage repayments but are not able to save up for the initial deposit.
When providing open and honest mortgage advice in Liverpool, we find this is a regular instance. This could be because the customer has larger outgoings like rental payments, home energy bills and essentials resulting in having no remaining amount to put into savings for a deposit.
Through receiving a gifted deposit, you will have opened yourself up to better rates of interest when you are in the mortgage process, in particular, for those with a gift that is above the minimum 5-10% deposit requirement.
Normally, it’s parents (birth and adopted) and carers who are able to gift you the deposit. This case is usually known in the mortgage world as the “bank of mum & dad”. It is possible for other family members to gift you the deposit, however, this is down to the lender and would require care when selecting the most appropriate mortgage lender for this.
In the case where the gifter is over the of 55, they may be able to provide you with the deposit through Equity Release in Liverpool & a Lifetime Mortgage.
The general consensus we find around this topic is that many customers aren’t aware that their parents can help with their mortgage or may not feel comfortable asking them for help. Normally, parents are willing and ready to help out their children by helping them on the road to homeownership.
In the majority of situations, taking out a mortgage can be a better option than renting. This is because you may end up paying less per month on your repayments over your rent. The deposit could come from inheritance, with some parents potentially gifting it earlier on in life if they currently have enough in savings or have released a specific amount of equity from their own family home.
Loans are something many lenders won’t accept as a deposit because the lender may be unsure that you’d be able to pay back both the loan and the mortgage at the same time.
There isn’t a set amount on the maximum you can receive as a gift, however, some lenders will want you to put in at least 5% deposit from your own personal funds.
Remember, the more you can afford to put down, maybe by combining savings and gifts, you’ll have access to better deals.
Generally, it’s first time buyers and home movers in Liverpool who will benefit the most from the gifted deposit.
As an expert mortgage broker in Liverpool, our team strive in providing top-level customer service with the aim to get them through the mortgage process with the help of expert mortgage advice in Liverpool.
Whatever your mortgage situation may look like, get in touch with our team today. Through our experience in speaking to customers seeking mortgage advice in Liverpool, we have encountered a variety of cases including complex ones.
The individual who is gifting you the money will need to sign a gifted deposit form stating that it is not a loan and is in fact a gift. Other proof of ID includes address and bank statements.
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Date Last Edited: August 1, 2023