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Hi
This "vender gifted deposit" is flying around forums, i dont quite understand it, can you exaplain please?
Does the mortgage company giving you the 85% know your deposit was a gift?
Why would the property owner want to give you 15%?
I must be missing something, hehe
Thanks
Matt |
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First of all, youre not Matt Holland of Charlton Athletic are you?
I believe the owner sells you the property at 15% higher than the purchase price and then gives you that 15% back on completion. In effect you dont pay any deposit for the property.I've heard only some solicitors know how to do this! |
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MMM, allow me to fully explain, a 15% deposit has to come from somewhere "agreed", when you negotiate your sale price you simply ask the vendor for a 15% deposit (this is rather a lot and most would normally gift between 5 & 10% all depending on how desperate they are to sell up). Remember the house still has to value up by an independent surveyor, so just lumping 15% on the sale price may not do it and may result in wasted money and time.
Now some lendors will not allow this and some solicitors will report this gifted depsoit to the lender so either the lender has to be aware of it or the solicitor keeps his gob shut!. A away to fool the solicitor would be to give him a cheque for the 15% made payable to the vendor and you cancel the cheque as the cheque should never be represented, hence "vendor gifted". The cheque is just to show the solicitor that a deposit has changed hands he will not know that you have an agreement with the seller as to not to cash the cheque.
A big thing in the 90s when people struggled to sell.
Hopefully the above does the trick Mat if not then please just ask more.
Thanks
Alex M @oakhillmortgages.co.uk |
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Yeah, sorry forgot to say, the surveyor has to have valued the property to this inflated price. Well pointed out Alex. |
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See my post in earlier thread titled gifted deposits. I think this is where Alex gets the idea from! Would be nice to get the credit Alex!
There are other ways around this as well. A solicitor would be breaking the law if he kept his gob shut. There are other creative ways to make this work which I can help with. Very few lenders now accept gifted deposits, especially for new builds. |
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Being new to this forum and having read the above posts I am mystified by the explanation Alex gives for gifted deposits.
Firstly as Zubair says you would need a solicitor who would be breaking the law - would you want someone on your team who does that?
Secondly when you buy a property you dont give your 15% deposit cheque payable to the vendor, you give it to the solicitor who then is in charge of the transaction and who would be responsible to transfer the monies to your vendors solicitor who would then issue the money via his capital account.
bizarre advice Alex.... |
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I don't buy offplan, which is where I think all this started, but I know it's rife in the market today. In Alex's defence, I don't think he's telling people to do it, more saying this is how some people get away with it, if you so choose.
Good point though John Hebble, it's nice to know the other side of the coin. It's certainly risky to have no equity in a less than booming market. Cashflow wise, the yield would have to stack up too, if borrowing 100%
John Grigg |
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Thanks John, quite right i was not telling poeple to do this just telling how it's done, and Zubair i only explained your idea as my way is a little too long and more complex. Of course legally i think the solicitor has to cash the 15% deposit then the money he sends to the seller all comes from the client account
Alex M
p.s. New builds? Zubair most lender accept gifted deposits on new build. |
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Sorry Alex, not very clear. Most lenders will accept new build gifted deposits, but only 5 or 10% Not many lenders will accept the full 15% being offered by so many developers these days. |
