House deposits?

[Col]

No Don that is absolutely NOT legal in anyway as Star would confirm as that is mortgage fraud

Sale price £180k
Deposit needed £18k
Mortgage needed £162k

Sollys/buyers negotiated price £170k with a 'gifted deposit' of £10k from vendor.

Seller accepts arrangement as do their sollys.

RICS confirms value at £180k

Buyer deposits £8k
Mortgage lender £162k agrees valuation and is aware of the 'gifted deposit' deal/arrangement.

Seller loses £10k and receives no more than the £170k less fees

The Land Registry will list the value at £180k

So do you see how it is possible to put down a smaller deposit legally on a higher value property rather than just negotiating a straight forward £10k reduction on the price and then subsequently having to still find a deposit of £17k.

Hope that helps

[Snowy]

"Am I correct then, that in the gifted deposit scenario, the property value is the asking price and the surveyors, lenders, solicitors all agree that that is the case i.e £180K and make their lending calculations based on that. In this case then, a 10% deposit would be required i.e £18K but the vendor requests only an £8K deposit because they have reached a sale price of £170K which is where the £10K is saved."

Not sure thats right, As far as im aware the deposit has nothing to do with the vendor and is dictated by the lender. So if the property is £180k and the morgage provider wants a 10% deposit then you need to pay £18k to the lender before they will release funds.

If thats the case then things really have changed since I last did this ;D. In my day, the deal was done between the vendor and buyer, the deposit was paid by the buyer to the vendor and the lender paid the mortgage to the vendor to cover the balance.

Why would a deposit be payable to the lender?

[R6_Don]

The lender takes the deposit incase you cant keep up the re payments. Then that will cover the cost if the house needs to be reposessed and sold on cheap.

[Dabz]

Both times I've done it I've paid the deposit to the solicitors

[R6_Don]

No Don that is absolutely NOT legal in anyway as Star would confirm as that is mortgage fraud

This is why im not a mortgage advisor ;D

[Honda_Star]

No Don that is absolutely NOT legal in anyway as Star would confirm as that is mortgage fraud

That's right col - 11 years as a solicitor so maybe my advice should be followed ?

[Snowy]

The lender takes the deposit incase you cant keep up the re payments. Then that will cover the cost if the house needs to be reposessed and sold on cheap.

Again, so much change in 20 years. It used to be the case that if you didn't keep up the repayments on the mortgage the lender would reposses your house and sell it to recover the debt. Bizarre ;D

[Snowy]

Both times I've done it I've paid the deposit to the solicitors

Yes mate who then passes it on, after taking a few weeks of free interest payments, to the vendor along with the rest of your hard earned ;D

[R6_Don]

I do know what your going through though SF, i am the worst person ever for saving as i always want a new toy for the garage
You could always ask the parents or In laws :-/
Thats what i had to do to secure my second mortgage. The bank wanted £38k deposit and I had nothing saved
So i asked the in laws if they would release some equity from there property as they where mortgage free. They did exactly that for the sum of £38k. It just means that now i have to pay my own mortgage plus the monthly repayment on there mortgage. I also pay an extra £300 a month off the inlaws to get the £38k paid off quicker
Not the best way to do things but if you find it hard to save then its a possibility.

[Last Train]

Scrap Trident, pull out of Libya, Afghanistan and Iraq. Pass the £30 Billion (approx) saved on to the local authorities across the UK to enable them to initiate an affordable house building programme. All contracts awarded on the proviso that the contractors take on apprentices. Reduces the benefit budget (2.5 million unemployed announced today) and gets some of our disaffected youngsters back in to work. And the icing on the cake – affordable housing which will help ease demand and may bring down the false over inflated private sector. Now what could be easier than that? - sorted