Using Equity Release to gift a deposit

Using Equity Release to gift a deposit

The bigger the deposit that can be put down on a house the better. Having 10% or more will not only widen the choice of lenders and products, it will also open the door to a lot of the better deals as well.

The average cost of a home for first time buyers is over £200,000 in England, making a 5% deposit over £10,000, and a 20% deposit will be at least £40,000. For many first-time buyers, this puts buying a house beyond their reach.

  • One solution is the “gifted deposit” option that many lenders are happy with. What it means is that the deposit is funded by a cash gift and then a mortgage can be obtained in the usual fashion. It is quite simple and straightforward. The next question is where does the money come from that will be used as the gift?

    That is where Equity Release can be the answer.

    It is becoming quite common for older relatives, typically parents or grandparents to use an Equity Release Plan to raise sufficient cash to be used as a deposit for house purchase.
    There are a few things to check first, however. Firstly, your chosen lender may have terms and conditions about who they will allow to give the gift. Grandparents and parents are the most popular and are always accepted, however, other relatives such as aunts, uncles, brothers, sisters, and those that are not related may be considered also, but are a lot less likely to be accepted.

    Another condition is that the gift must be unconditional. This means that if there is any suggestion that the arrangement involves paying the money back, then the lender will not agree to the plan.

  • Using an Equity Release Plan in this way has obvious advantages:

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      The money is instantly available. There is no need to wait what could be years to save for a deposit.

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      A larger deposit will allow the borrower to access better mortgage deals, such as fixed rates and lower interest products

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      There is no compulsion to make any monthly repayments on the Equity Release Plan

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      It is possible that a larger home that would otherwise not be considered could be purchased; an ideal situation for a younger family

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      Gifted deposits can be given for all types of property; including new builds, shared ownership, and buying from an existing family member.

  • Means to a Lend have access to both Equity Release specialists and Independent Mortgage specialists who are able to work together to help you achieve what you want to achieve. Just fill out the enquiry form in your own words, and we will put you in touch with the right people. Quickly and for free.

Have a question?

Whether it is just a query about something you have read, or you wish to move on to the next stage of your process, drop us an email and we will be happy to help. Easy, free, and with no obligation

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