Home Buying Guide

Gifted Deposit

Gifted deposit and a gifted deposit mortgage is a way of buying a first home without raising the deposit yourself.

A gifted deposit is a sum of money given by a third party for use as a deposit for a property. More and more first time buyers are receiving gifted deposits either from family members or house-builders to help them on the first rung of the property ladder. This can make the difference between being able to afford your first home and not becsaue you can buy a home with no deposit! The reason these have a special name is because there are particular tax laws governing the money accepted as a gift. That being said, many first time buyers are benefiting from this way of buying a gifted deposit property.

Find out more about gifted deposits from parents, see our 'How Parents Can Help Guide'.

New house builders are making it much cheaper for first time buyers to buy new properties by offering gift deposits. There is a company now offering a gifted deposit service to first time buyers - it was traditionally reserved for property investors.

More about gifted deposit properties: FIRST STEPS is a new scheme for first time buyers allowing you to purchase a brand new home with a cash investment of only £2500. This has been developed by New Home Direct, who are using the discounts normally offered to investors to fund your deposit and all your purchasing costs.

The deal includes:

• 5% gift deposit on your new apartment or house
• 1% stamp duty paid
• All your fees – including your survey fee, solicitor fees, searches and our fees
• £500/month towards your mortgage costs for up to 12 months following completion
• £2500 back in the form of Ikea vouchers or a furniture pack to fully kit out a 1 bedroom apartment following completion 

You will need to have a gifted deposit mortgage offer in place (Decision in Principle or DIP),  (Contact a mortgage advisor now about this).

You will be over 25, have a good credit history and have a single or joint income of more than £25k per year.  It's possible that you could be in your new home within 2 months!

Once you have your mortgage offer and have found the property you would like to purchase, you will be asked for £2500 non-refundable commitment deposit. This is used to reserve your gifted deposit property and initiate the searches and valuation.

There are only a limited number of properties available in London and the south of the country (as most developers do not need to offer any discounts or incentives). Once New Homes Direct find you a suitable property, you will pay a commitment deposit of £5,000 upfront. You still receive the same deal but on completion you get £2500 worth of vouchers (or a furniture pack) and £500 per month for 6 months (instead of 12 months).
 
Other useful Home Buying Guides:
 
Property for Sale  Home Information Packs  Finding a Property Co-Buyer  Low Cost Home Ownership  Repossessed Property   Property Auctions  Getting a Mortgage if you have Debts   Inheritance Tax Planning  Investing in Rental Properties  Stamp Duty  Affordable Housing   

• Contact the gifted deposit service provider
• Seek mortgage advice for a gifted deposit
• Tax advice for parents offering a gifted deposit