A gifted deposit is what it says on the tin, a deposit that has been gifted to you. It can either be the full amount or a portion of the deposit, and there has to be an agreement in place that you won’t be repaying the person gifting to you.
Gifted deposits are useful to have at hand when you have enough money to cover the costs of your monthly repayments but are unable to make up the amount required for the initial deposit.
The more deposit that you can have gifted to you, the bigger the potential for better rates from a mortgage lender. If you happen to be on a lower salary and are struggling to find a means of putting money into savings, this again can be very useful.
Generally speaking, gifted deposits are normally given out by your parents (adopted parents & carers may also fall into this category, depending on lender). On the internet this is regularly referred to as the “Bank of Mum & Dad”.
It may not just be parents though, as there are other potential family members who a mortgage lender may consider accepting for a gifted deposit. This once again depends on the different lenders that you approach, which would require care when looking for the right one. It’s because of this that you might benefit from a mortgage broker in Bristol.
We often hear from our customers that they were never aware of their parents ability to provide a boost to their mortgage. Many of them also don’t feel like they can ask their parents to help. The truth of the matter is that most parents are more than happy to help their kids get onto the property ladder.
For the most part, it is widely believed that taking out a mortgage is a better option for first time buyers in Bristol than renting, due to the possibility of being able to pay less money per month.
Setting out where your finances will be distributed as inheritance can often be contributed towards a deposit, though some parents do gift this to their kids earlier on in life if they have already saved enough to cover it or have released a certain amount of equity from their home.
The vast majority of lenders won’t accept you using a loan to fund your mortgage deposit. The reason for this boils down to the uncertainty that you’d have enough disposable income left over to cover the costs of both the loan and the mortgage at the same time.
There will be no maximum amount to how much deposit someone can gift you, though there are some lenders out there who would prefer their applicants to have at least 5% deposit saved themselves, with any gifts being used to increase this.
No matter whether you are a first time buyer in Bristol or you are moving home in Bristol, you will be able to reap the benefits of utilising a gifted deposit. It also comes in really handy when used alongside a Help to Buy in Bristol, as the required 5% deposit, depending on the lender that is used, can be boosted with a gifted deposit.
Usually you’ll find that all lenders will require a gifted deposit form to be filled in. Depending on the lender that you go with, you may also be asked to provide additional proof and ID (these can include such items as a donor ID or bank statements).