Vendor gifted deposit
- Thread starter Gilly
- Start date
There was a thread on it earlier today. Edit : Well, a thread in which it was briefly brushed on.
What it means is..... we have a survey that says it's worth the asking price but you're paying less than the asking price and we're accepting less than the asking price. But we're going to tell the bank it's worth more than I'm prepared to accept when selling it.
In theory it could be used when someone is in a hurry to sell.
In practice the companies doing new builds found more and more ways to try to scam the banks into doing mortgages outside what they intended.
I don't know of any banks by name that still do them. There may be some.
What it means is..... we have a survey that says it's worth the asking price but you're paying less than the asking price and we're accepting less than the asking price. But we're going to tell the bank it's worth more than I'm prepared to accept when selling it.
In theory it could be used when someone is in a hurry to sell.
In practice the companies doing new builds found more and more ways to try to scam the banks into doing mortgages outside what they intended.
I don't know of any banks by name that still do them. There may be some.
Its not really dumping on banks and its definately not fraud. A Vendor gifted deposit has to be agreed both by the selling and buying parties and by the lender. The solicitors involved in the sale/purchase are obligated by law to declare this and inform the lender, if they do not then it is classed as fraud. You will be hard pressed to find a bank willing to do these nowadays, if you have found one then go for it 
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When i bought my first house 17 years ago the person selling payed my deposit. I say paid. I did not put a deposit down on my morgage and they got 5% less for the house. Was all done through the estate agents also. Got cashback from the nationwide also so was a bonus.
Sounds similar to me.
Sounds similar to me.
This wouldnt happen nowadays, the lender would have been told by the solicitor managing the financial side of the sale that no "cash" depost was being paid which would more than likely trigger the lender into not freeing up the funds. Unless of course the lender is aware that this is happening and has agreed to it.
This is what I'm wanting to know really. I can put some cash up, but not the deposit they want for the house we want. Can cover the repayments but not the deposit, and without the level they want we get bummed on interest.
If I could find a lender willing to allow a vendor gifted deposit, and I match that, the savings would be huge.
Indeed, As you can tell I have read up on it quite a bit as our circumstances are the same, can afford £800 a month but have £0 deposit saved!. Money Saving expert has some good threads on it but be advised some of the info is dated!
The problem is that house builders are cheats and liars. Yes, really!
They do all sorts of tricks to try to con banks.
Buy this house and we'll pay your deposit - that just means buy this house which we've added on 10% to the asking price. We'll cut the price down and only the bank loses out.
Buy this house and we'll give you 5K cash back - That means they've added 5K to the price.
Buy this house and we'll give you your appliances - Same thing
They used the vendor gifted deposit thing until banks got so fed up with it all they want huge deposits on new builds in general.
The latest scam is with Hitachi capital where they're going to say you only need a 5% deposit, and your parents guarantee the rest. Instead what really happens is they credit score your parents to make sure they could turn an unsecured loan into a secured one if need be, take 20% from your parents, charge them a very bad mortgage rate, charge you a very bad mortgage rate too.
They do all sorts of tricks to try to con banks.
Buy this house and we'll pay your deposit - that just means buy this house which we've added on 10% to the asking price. We'll cut the price down and only the bank loses out.
Buy this house and we'll give you 5K cash back - That means they've added 5K to the price.
Buy this house and we'll give you your appliances - Same thing
They used the vendor gifted deposit thing until banks got so fed up with it all they want huge deposits on new builds in general.
The latest scam is with Hitachi capital where they're going to say you only need a 5% deposit, and your parents guarantee the rest. Instead what really happens is they credit score your parents to make sure they could turn an unsecured loan into a secured one if need be, take 20% from your parents, charge them a very bad mortgage rate, charge you a very bad mortgage rate too.
So we found a house we wanted to buy, put an offer in at £32k less than it was originally on the market for (£5k lower than the lowest asking price, £15k lower than it was last week) and the Halifax are progressing our mortgage with 5% cash deposit plus 5% vendor paid.
Surveyor due Monday
Surveyor due Monday
fantastic good to hear!
Out of interest, as someone who hasnt looked into it as much yet, what interest rate have you managed to get, for how long, and what does this equate to in monthly payments etc? I want to know basically how far away I am from being able to buy instead of spending dead money on rent.
IE:
(rough) purchase cost
deposit amount (from you, + vendor matched deposit)
Term (25yr? 30 yr?)
APR? Fixed?
Monthly repayment
That is of course if you dont mind If it's too much info dont worry
Cheers
Tom.
good to hear!Out of interest, as someone who hasnt looked into it as much yet, what interest rate have you managed to get, for how long, and what does this equate to in monthly payments etc? I want to know basically how far away I am from being able to buy instead of spending dead money on rent.
IE:
(rough) purchase cost
deposit amount (from you, + vendor matched deposit)
Term (25yr? 30 yr?)
APR? Fixed?
Monthly repayment
That is of course if you dont mind
If it's too much info dont worryCheers
Tom.
House purchase amount: £130k
Cash deposit amount: £6825
Vendor paid deposit amount: £6825
Overall worth of deal: £136,825
Actual money borrowed (90% mortgage): £123,175
Interest rate: 5.89 (2 year fixed)
Monthly payment: ~£750
That's all off the top of my head as I don't have the paperwork to hand right now
Cash deposit amount: £6825
Vendor paid deposit amount: £6825
Overall worth of deal: £136,825
Actual money borrowed (90% mortgage): £123,175
Interest rate: 5.89 (2 year fixed)
Monthly payment: ~£750
That's all off the top of my head as I don't have the paperwork to hand right now
Looks good. The interest rate is 
but that's because of the vendor gifted deposit.
All you need to do is cross your fingers the surveyor agrees the house is worth 7K more than you're paying and everything is fine.
Over the next 2 years you should try and get enough money put away so that you can get under 90% to get more competitive rates, and if there is a recovery in house prices it might put you under 80%.
but that's because of the vendor gifted deposit. All you need to do is cross your fingers the surveyor agrees the house is worth 7K more than you're paying and everything is fine.
Over the next 2 years you should try and get enough money put away so that you can get under 90% to get more competitive rates, and if there is a recovery in house prices it might put you under 80%.
Why do you think that?
certainly it is worth fixing at a decent rate if you can get it. However a high 5% rate isn't really a decent rate. I think Gilly is doing the right thing and re-assessing in two years. I don't see the interest rate going up 9.5% in two years. They'll certainly be a slight raise next month however (imo of course)