Whilst the days of 100% mortgages are behind us for now it can be possible in certain circumstances to buy a property without investing any of your own cash. Buying from a property under a right to buy mortgage scheme is one example, as is buying from a family member or Landlord when they are offering you a discount from the open market value.
In terms of gifted deposits, here are the answers to a few commonly asked questions
- Who can gift the deposit?
- Can it be a loan rather than a gift?
- How much can be gifted?
Who can gift the deposit?
It tends to be “Bank of Mum and Dad” (or Gran and Grandad) that gifts the deposit to the applicant and this is acceptable to most Lenders. The gift must be evidenced by way of bank statements from the donor + their ID. We do have access to a Lender that will accept a gifted deposit from a close family friend which could open up more options for you.
Can it be a loan rather than a gift?
In almost all circumstances it needs to be a gift and the donor will sign a letter (which we can help prepare) to confirm the funds are non-refundable and they will not put a “charge” on the property you are buying. Once again though, there is an exception and we do currently have access to a Lender that will accept a loan rather than a gift.
Be careful though, taking out a personal loan just before applying for a mortgage will probably have a downward effect on your credit score which could lead to a mortgage application being rejected. Also, the monthly payments for the loan will have to be taken into account by the mortgage lender when they are calculating how much they will lend you.
How much can be gifted?
There is no maximum limit on the amount of gift you can receive although I know of at least one Lender that insists you put in at least 5% deposit from your own funds.
Date Last Edited: December 19, 2023
