Gifted deposits are becoming increasingly popular, especially amongst First Time Buyers in Sheffield. Gifted Deposits are an easy way to get onto the property ladder when you are struggling financially.
To put it simply, a gifted deposit is a sum of money that is gifted to you to put towards your mortgage deposit. As a Mortgage Broker in Sheffield, we always get asked questions about gifted deposits, here are most frequently asked ones:
It tends to be “bank of Mum and Dad” that gifts the deposit to the applicant and this is acceptable to most lenders. However, it can be anyone really, sometimes we see that friends have decided to gift the deposit. In addition, your Mortgage Broker in Sheffield 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 cannot be a loan. Also, the donor will need to 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. You can receive part of the 5%, all of the 5% or sometimes if you are lucky, you could get more than the 5%.
You could maybe receive a portion of the 5% and then use the rest of your savings to add to your gifted deposit which could end up taking you up to the 6 or 7% mark. This could look really good in front of a lender, especially as a First Time Buyer in Sheffield.
If you have been offered a gifted deposit and don’t know how to provide proof to your lender that it is a gifted deposit, you should approach a local Mortgage Broker in Sheffield so that they can explain the procedure. For example, if you come to Sheffieldmoneyman for Mortgage Advice in Sheffield, we will sort everything out for you as well as trying to help yous secure the best mortgage deal for your personal and financial situation.