Circumstances where you are gifted money to contribute towards part of or all of your deposit are called a Gifted Deposit. This sum of money can be given to you by a friend or family member, on the condition that they don’t need to repay the money.
The benefits of gifted deposits are that they can help you in the circumstance where you can afford monthly payments but not the initial deposit. Furthermore, having a gifted deposit can mean that you are offered a better rate if the gifted amount is a lot.
In the instance where you can’t afford the initial deposit due to being on a low salary but you can afford to pay the monthly repayments, this can help you.
It’s common that your gifted deposit is from your parents, be this birth or adopted. When this happens, the method is referred to as ‘The Bank of Mum and Dad’.
Family members besides your parents can gift you a deposit, however, this does depend on the individual lender. You need to be careful when trying to find the right lender who can do this for you.
Gifting a deposit can be done through an equity release in Cambridge. This can only happen if the person who is gifting you the deposit is over the age of 55.
As a mortgage broker in Cambridge, we find that many clients aren’t aware that there is an option available where their parents can help with their mortgage, or sometimes clients feel like they can’t ask their parents for help.
In many cases, parents are happy to support their children’s property dreams by lending a helping hand.
Taking out a mortgage compared to renting can be believed to be more beneficial. This might be due to the fact that you would potentially pay less per month.
It can be common for a gifted deposit to be from an inheritance, but parents may gift it earlier in life. Sometimes, the deposit may be from parents saving up enough or releasing a particular amount of equity from their property.
Paying a deposit by using a loan isn’t an ideal option and is something lenders don’t always feel comfortable with people doing. There is the risk that you won’t have enough for not only the mortgage but the loan at the same time which is why lenders don’t always feel comfortable with this option.
The choice is yours when it comes to the maximum amount of deposit you want to gift. Sometimes, you need 5% of the deposit to be from your own pocket, however, this can depend on the lender.
If you are a first time buyer in Cambridge or a home mover in Cambridge, you can benefit from a gifted deposit. The Help to Buy Scheme can be good to have with a gifted deposit but, this depends on the lender. This is due to the fact that the scheme requires a 5% deposit, therefore paying that using the gifted deposit could be a choice.
Obtain a gifted deposit form to provide to the lender is required. In some cases, you might need to show some other proof and ID (donor ID/bank statement and so on) again, this depends on the lender.