With more and more first time buyers finding it difficult to purchase their first property, many are turning to parents and relatives to help fund the deposit in full or part however if you are considering funding your deposit this way take advice as not all lenders offer this option and many will only accept the gifted deposit from a close family member I.E. mother, father brother or sister.
For a lender to accept this, the deposit has to be a gift, as a loan would count against affordability, generally the person giving the gift needs to sign a letter confirming the gift and that it is not repayable.
Gifted deposits can also work where a relative is prepared to sell their property to a family member under the market value, for example say your father has a property worth £150.000 and he is prepared to sell it to his son for £130.000 so long as the property is valued by the lender at £150.000 then this has created £20.000 deposit/equity in the property and no need for his son to put in a deposit of his own.
Need more information on gifted deposits then contact one of our advisers at the mortgage shop?