Gifted deposits are becoming more and more popular, particularly amongst First Time Buyers in Coventry. Here are the answers to the most common questions we get asked about gifted deposits:
It tends to be “bank of Mum and Dad” that gifts the deposit to the applicant and this is acceptable to most Lenders. Parents often see their children struggling to get onto the property ladder so decide to give them a little boost to get them started. In addition, your Mortgage Broker in Coventry and lender/solicitor will be required to see evidence of the build-up of funds and also identification.
In almost all circumstances it needs to be a gift and the donor will sign a letter to confirm the funds are non-refundable. They will not put a “charge” on the property you are buying. Be careful though, taking out a personal loan just before applying for a mortgage will probably have a downward effect on your credit score. This 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 for affordability.
There isn’t a maximum limit on the amount of gift you can receive. However, we usually find that parents or friends gift the 5% or a portion of it.
If you have received a gifted deposit and still want more advice on them, get in touch with your Mortgage Broker in Coventry today and we can help answer all of your remaining questions.