Getting the money together for a mortgage deposit can sometimes be a struggle. A lot of people are not aware that there are more ways to put down a deposit than just using your savings. There is in fact a wide variety of schemes and methods to pay for your deposit. Read on to find out more about the options available.
Family Gifted Deposit
A family gifted deposit is the sum of all, or part of, your deposit gifted to you by a family member. Generally, lenders are most likely to accept the deposit if it is from parents or immediate family, however some will allow the gifter to be a more distant family member.
Family Springboard Mortgage
Family Springboard mortgages are offered by a limited number of lenders. If your parents or family members want to be able to assist you with your mortgage deposit, but cannot afford it themselves, this scheme allows said gifter to deposit a percentage of the purchase price into a savings account with the lender. The lender will then take charges over the finds as a security method in any event of poor credit/default/ccjs. After around 3-5 years the gifter can release their money and transfer it back into their own savings/pension etc.
Help to Buy scheme
The Help to Buy scheme requires you to provide a deposit, however it will be smaller. The government lend you an Equity Loan of up to 20% of the cost of the property, leaving 5% needed for a deposit and the last 75% to be made up through the mortgage payments. This means that you will require a smaller upfront deposit.
Armed Forces – Help to Buy
The Armed Forces HTB scheme allows armed forces personnel to borrow up to 50% of their salary (Max. £25,000) interest free in order to get onto the property ladder or change their home due to assignments or family needs. The borrowed money can be used to pay for a deposit or other fees within the mortgage process.
Sale of an asset
This method is fairly self-explanatory. The deposit comes from the sale of an asset for example a car or from the sale of a house. Of course, this is only possible if it is feasible for you to sell your car/if you are selling your home.
Landlord Gifted Deposit
A Landlord gifted deposit is where the landlord of the home you are living in gives you the opportunity to purchase the property at a discounted price, therefore reducing the cost of mortgaging. Not many lenders will accept this type of mortgage and you may be asked to provide at least 5% of your own money to show you can afford to and will commit to paying for a mortgage.
Builder Gifted Deposit
A Builder gifted deposit is when you are purchasing a new build, and the builder offers to pay towards the deposit. Similarly, to Landlord gifted, there is a very limited amount lenders who will accept this type of deposit. If it is accepted by a lender you may again be asked to produce a part of the deposit yourself.
It is probably best to speak to an adviser before you go ahead with any of these deposits unless you are already well informed. Contact one of our advisers today on 0333 320 8658 or send us an email at [email protected] and we will do what we can to help you find the best deposit option for you! (Remember, deposits are not required for remortgages as you use the equity you already have on your home.)
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