As the housing market continues to struggle, the importance of diversification to help as many people both buy and sell property is vital. With this in mind a vendor-gifted deposit could be the answer.

What is a vendor-gifted deposit?

Most mortgage lenders require 10-15% deposit for a property purchase. A vendor gifted deposit is a scheme that allows the person selling the house to fund 5% of the deposit on behalf of the buyer - advisers arrange this by liaising with vendors, lenders and solicitors. Sapphire Mortgage have plenty of experience in this area and can do the liaising on your behalf.

To summerise, a vendor gifted deposit allows a purchaser to buy a property, when both rules mentioned below are met, depositing 5% less than they need too. The two rules which must be met; Firstly not all banks accept this method of providing a deposit - so you must find bank who does. Secondly the surveyor must agree that the asking price is fair. In other words, we cannot over-inflate the asking price to make it look like a deposit is there.

An Example

A property is up for sale valued at £100,000. The vendor (seller) is happy to receive £95,000 and will "gift" the £5,000 (5%) to the buyer. Therefore in theory the buyer needs to find a deposit, less 5% thanks to the vendor (seller) gifting this deposit in the value of the property.

Why would someone want to pay 5% of my deposit?

In the current climate, sellers are accepting offers below the asking price and the offer to pay 5% of the buyers deposit is to attract you to their property - similar to offers by builders of new homes.

5% of your deposit paid - is it that simple?

Yes - and a vendor-gifted deposit may make your payments cheaper by offering a lower interest rate as your loan to value will be lower. It is, however, subject to status and only selected properties and lenders offer this facility. The majority of lenders will require clients to provide some degree of their own funds.

Is there an additional charge for this service?

Sapphire Mortgages will not charge you for this service and nor should the Estate Agent.

Who Does This?

Lenders change their criteria all the time, so speak to an advisor at Sapphire Mortgages first to make sure this is still available and with what lenders.