There are several potential sources you can consider when it comes to getting together a deposit to buy a property. Providing proof of the source of your deposit is a key requirement in the application process and will need to be given to both the lender and the solicitor.

Each mortgage lender will have their own criteria as to what they deem as an acceptable source of deposit. These include:

  • Personal savings

This is the most traditional and straight-forward way to fund a deposit for your home deposit. Lenders are happy to accept deposits funded by the applicant’s personal savings, although they may want to see bank statements to show the balance increasing over time.

  • Inheritance

Lenders are usually fine to accept a deposit funded by inheritance you may have received. You will be required to share legal documents from the Will’s Executor showing details of the amount, as well as evidence the money in your account.

  • Gifted deposits

Most mortgage lenders are happy if your deposit was gifted to you by a close relative. Some lenders even allow gifts from friends or more distant relatives. You will need to provide a signed legal agreement declaring that the money does not need to be re-paid.

  • Deposit from selling a property

If you are already a homeowner and you are moving home, you may be using the “equity” in your current property as a deposit for your new one. The solicitor will deal  with this for you when the sale and purchase complete.

  • Equity from another property

If you own another property, you may have enough equity to be able to release by way of a re-mortgage to make up a deposit to buy another property.

  • Gifted Equity
    Some lenders allow family members or associates selling property to gift some of the equity to the buyers, in leu of a cash deposits.

Landlords are now able to gift equity to tenants as part of a mortgage transaction, so be sure to ask if this is an option if you landlord is selling

  • Government schemes
    There are government-backed schemes on offer, this includes the First Homes scheme where the deposit required is a minimum of 5% of the discounted purchase price. This has been introduced in a bid to get first time buyers on the property ladder by offering a lower deposit and a 30-50% discount on the house itself.
  • 100% Mortgages

Finally, if you simply cannot raise funds for a deposit, it looks like 100% mortgages are returning – so you may not need one anyway!

If you have further questions about mortgage deposits, please get in touch with our team of experts.

James Achille
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