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Unlocking Your Homeownership Dreams with ADD Property Finance: A Comprehensive Guide to Gifted Equity Deposits

In the realm of soaring property prices and stringent lender criteria, ADD Property Finance emerges as your trusted ally in realising homeownership dreams. When traditional paths seem challenging, a gifted deposit from the Bank of Mum and Dad or other close relations can be the bridge to your dream home. Let ADD Property Finance guide you through the intricacies of gifted equity deposits.

Understanding Gifted Deposits: A Boon for Homebuyers

1. What is a Gifted Deposit?

A gifted deposit is a financial boost provided by family members or close relations to assist homebuyers in securing their dream property. Unlike loans, gifted deposits are not expected to be repaid, ensuring a clear distinction that lenders appreciate.

2. Ways to Gift a Deposit

Explore various avenues to contribute a gifted deposit, such as direct bank transfers, pension withdrawals or releasing equity from your own property. ADD Property Finance advises careful consideration of financial implications before choosing the best option.

3. Who Can Gift a Deposit?

While the Bank of Mum and Dad remains a prevalent source, the horizons can be broadened. Siblings, grandparents and partners are also widely accepted by mortgage providers. The key is understanding each lender’s policy regarding the relationship between the giver and receiver.

Navigating Gifted Equity Deposits: Types and Considerations

1. Concessionary Family-Gifted Deposit

Considered a low-risk option, a family member selling a property at a discounted rate can contribute to your deposit. We can help you highlight its legitimacy, often allowing it to make up 100% of the deposit.

2. Builder-Gifted Deposits

Explore the world of new builds with house builder-gifted deposits. While some lenders accept them, be prepared to complement it with a personal cash contribution, usually around 15-20%.

3. Vendor-Gifted Deposits

Vendor-gifted deposits, though less common, can still be a viable option. Lenders may scrutinise the original asking price, potentially requiring additional cash from the buyer.

4. Landlord-Gifted Deposits

Similar to vendor-gifted deposits, this option involves landlords selling properties at a discounted price. Lenders may insist on confirming the property’s true value and may require additional personal cash contributions.

Insights into Lender Perspectives: Securing Your Mortgage

1. Source of the Gift

Lenders have varying policies on the source of gifted deposits. We can help you to identify lenders accommodating your unique situation.

2. Gifted Deposit Amount

Recent changes have eased restrictions on gifted deposit amounts. While some lenders accept 100%, others may have specific requirements, especially for concessionary purchases.

3. Proving the Gift

Lenders require thorough documentation to validate gifted deposits. We advise getting a signed declaration, identifying the source, confirming it as a gift and demonstrating no obligation for repayment.

Navigating the Complex Landscape: Additional Considerations

1. Tax Implications

Gifted deposits fall under Potentially Exempt Transfers, potentially exempt from inheritance tax if the giver survives seven years. We recommend seeking advice from a qualified tax accountant to navigate this landscape effectively.

2. Impact on Eligibility

Various factors, including self-employment, bad credit, non-standard constructions and borrower age, can influence eligibility. Consider additional personal contributions to strengthen your case.

Expert Guidance: Your Path to Homeownership

For nuanced advice on gifted deposits, get in touch with ADD Property Finance today. Whether you’ve received a gift or plan to offer financial support, our team, armed with experience and access to multiple lenders, will guide you seamlessly through the process.

Let ADD Property Finance be your partner in turning the key to your dream home. Get in touch.

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