# Vendor Gifted Deposit?



## S-X-I (Sep 6, 2006)

Just looking for a bit of advise on a Vendor Gifted Deposit Mortgage as we had a meeting with a 'whole of market' financial advisor tonight and he brought up this option.

Basically we have seen a property that we like and we can put down a 15% deposit outright. The financial advisor discussed the Vendor Gifted Deposit to give an additional 10% gifted deposit so that we qualify for a better interest rate as the mortgage would only be 75% of the value of the property.

I am really struggling to get my head around how this works.

As far as I can tell it doesn't effect the T&C's of the mortgage but we will save money due to the lower rate of interest being paid.

Could someone please explain any advatages or disadvantages of this and weither it is recommended.

Thanks in advance :thumb:


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## S-X-I (Sep 6, 2006)

Anyone? lol


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## SarahAnn (Apr 6, 2011)

When i bought my first house (back when a semi was less than £30K!), there was a 'vendor gifted deposit' of 5%. It just meant that i only had to get a mortgage for 95% of the purchase price and didnt have to find 5% cash upfront.

I don't understand your question really. 

A vendor gifted deposit is fine, it just means that you don't have to stump up as much and you don't have to borrow as much as the remaining balance will be less.

It just means that the vendor will pay your deposit (as they must be keen to sell). It's a win win situation for you. You get the deposit paid and you borrow less. 

HTH


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## davies20 (Feb 22, 2009)

I think your wanting to know how the Vendor deposit works.

Basically, house goes on the market for £100.000.

You agree a sale value of £90,000. But as long as the Surveyer feels the house is actually worth 100,000, then technically they've gifted you 10,000, or i think thats how it works.

But basically, the house has to be worth MORE than you paid, like, really obviously more. Otherwise its just classed as what you buy it for is its true market value.

We were going to do it with a house we were going to buy before the one were in, cant fully remember what it was though!


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## X-Man (Jan 3, 2011)

Not sure that's how it works.I think the sale price would still remain at £100k and the vendor would 'gift' £10k back to you.

To everyone concerned the house sells at £100k although the vendor only gets £90 after all is done (the other £10k going to the lender).

I think you will need to find a specific lender and may find it difficult unless the valuation comes in way above the agreed price.

I also thought, having researched this for another purchase that the limit was 5% and has to match your contribution. But this will be up to the lender.


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