Gifted Deposit FAQ’s | Mortgage Advice in Hull

What is a gifted deposit?

A gifted deposit is either the full amount or a portion of the deposit you need, given to you as a gift with an agreement that you don’t need to repay the person who has given you it.

How can gifted deposits help?

Gifted Deposits come in handy when you have been able to save enough for your monthly repayments but are struggling to afford the initial deposit, something that is common for people on lower incomes. Having more gifted deposit available may also allow you to receive potentially better rates from a mortgage lender.

Who can gift the deposit?

We often find that it is mostly parents (birth and adopted) and carers who are able to gift you the deposit. You may see this referred to online as the “Bank of Mum & Dad”. Other family members could also be considered when looking at the option of a gifted deposit.  This is very much dependent on individual lenders so your dedicated Mortgage Advisor in Hull would need to be careful.

If the person supplying you the gifted deposit is over the ages of 55, they do have the option to take out Equity in their own home as a gift for their family member/friend. If you are thinking of choosing this option, you should consider taking Equity Release in Hull.

Do your parents know you need help?

We often find that customers don’t really know that their parents can help them out with their mortgage, or they don’t feel like they can ask them for help. In truth, most parents are more than happy to help their children, wanting them to get on the property ladder and live a comfortable life in a property they own.

Statistically, taking out a mortgage often works out better than renting, due to the potential for you to pay less per month. The deposit usually comes from inheritance, although parents can sometimes gift it earlier on in life if they already have enough saved or have released a certain amount of equity from their own home.

Gifted deposit vs loans

Most lenders won’t accept a loan to pay off your deposit. This is down to the lender being unsure that you’d have enough disposable income to pay back both the loan and the mortgage simultaneously.

Is there a maximum or minimum gifted amount?

There is no maximum limit on the amount that someone can give you as a gift, with more deposit often giving you better rates, though we know of at least one lender that insists you put in at least 5% deposit from your own income.

Who can benefit from a gifted deposit?

The people who reap the most benefits from this tend to be First Time Buyers and Home Movers. It can also be very helpful when used in conjunction with the Help to Buy Scheme, as the required 5% deposit, depending on the lender, can be paid via gifted deposit.

What proof is required?

For the most part, all lenders will require a gifted deposit form. Depending on the lender, you may be asked to provide additional proof and ID (things like donor ID or bank statements).