Since Halifax withdrew their scheme where vendors could pay deposits to their purchasers it has become more diffcult for first time buyer to get on the housing market. There have been schemes introduced to help first time buyers and home movers who are offered assistance by parents or grand parents.
Parent Gifted Deposit
There are a substantial number of lenders who will accept where the whole or part of the deposit is gifted by the parents to enable their son/daughter obtain a mortgage. The parents will have to sign a ‘deed of gift’ letter to confirm that the funds are a gift and are not repayable. Halifax has one of the widest definitions of who can make gifted deposits. (Vendor deposits are no longer acceptable)
Another route is where the parents sell a property to their son/daughter at below market value. In these circumstances there is a much reduced choice in lenders. In this situation the equity in the property is treated as the deposit and no further funds are required. Nationwide and Principality are willing to lend in this area.
Genuine Sale below Open Market Value (Landlord to Tenant / Employer to Employee)
In this case no physical money passes hands but the gift is in the form of equity and the purchasers do not need to put down any deposit. Unusually Nationwide will accept employer to employee and landlord to tenant on this basis.
Woolwich Family Spring Board Mortgage
This is a new option launched by Woolwich. They will advance a 95% a mortgage to the applicants. For an additional guarantee a further 10% is deposited in a Woolwich savings account by parents or grandparents. This money earns interest and is then returned after 3 years.
Bath B/Society Paraent Assisted Mortgage Scheme
This scheme was a winning mortgage product in the Mortgage Finance Gazette Awards in 2010. The lender will advance a 95% a mortgage to the applicants. For an additional guarantee a further 20% is taken as a second charge on the parents property. The benefit of this sheme is that no money is needed to be found by the parents.
According to a recent press release 21/2/2013 the scheme will be improved where the Bath Building Society will advance 100% of the purchase price but increasing the second charge to reflect the increased risk.
There are new schemes being launched. Contact me for the latest position.
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A fee of £495. Payable at the completion of the mortgage and Neil Soundy Financial Services Ltd will keep the commission received from the lender or agents for arranging the mortgage.
We do not give or imply legal or taxation advice. We recommend you contact a solicitor or accountant for advice in these areas.
Think carefully before securing other debts against your home/property. Your home/property may be repossessed if you do not keep up repayments on your mortgage.
Neil Soundy Financial Services Ltd is an appointed representative of HL Partnership Ltd which is authorised and regulated by the Financial Conduct Authority.
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