Where can your house deposit come from?
Posted on 19th April 2022 at 12:43
For all property purchases in the UK whether that be residentially or Buy to Let, you must provide a
deposit. This deposit is a % of the purchase price. Upon submitting a mortgage application you must be
able to evidence your deposit and deposit can come from various places in various forms. Here is a list
of deposit types that most lenders accept:
This could be money you have saved into a ‘Help to Buy ISA’ or a Lifetime ISA’ (LISA). Most lenders
require a monthly savings statement to prove you have this in your account. To prove this you must
provide a statement that shows your name and address on to show the funds and the account belong to
TOP TIP - Ensure your address is accurate on your bank statements, so if you have moved house in the
past make sure you have updated your address with your bank.
A family member can gift you the money for your deposit for your purchase. For a deposit to be classed
as a gift it must be money given to you by a family member who does not want the money back and who
will not live in the property or have any financial interest in the property. Depending on the lender and the
size of the gift, that specific lender may require the donor of the gift to complete a gifted deposit form and
a bank statement to evidence this money. Like above it must show their name and address on to prove it
belongs to them.
When selling a property you own to move into another property you can use the equity within that
property to be used as a deposit. This can be proven with a memorandum of sale to show the sale prove
of your property. This equity would then be transferred over to the new property by your solicitor. You can
also use equity released via a remortgage as a deposit with a mortgage offer document provided to the
Forces Help to Buy scheme
Introduced in 2014 all members of the armed forces can take advantage of the forces help to buy up
scheme. Members of the armed forces can lend up to 50% of their annual salary up to a limit of £25,000
to be used as a deposit. This amount will then be paid back to the forces each month out of the members
gross pay over a period of 10 years.
If an applicant wishes to use money they have received via inheritance they can provide a letter form the
solicitor executing the will and estate of the deceased. A bank statement showing the receipt of those
funds should be provided to the lender also to support this.
This applies to new build properties. A builder can offer an incentive of a deposit contribution up to 5% of
the property value to help buyers increase their deposit to qualify for a mortgage. The solicitor acting on
behalf of the applicant should provide a letter outlining this which is to be forwarded to the lender.
As the deposit types accepted by lenders varies from lender to lender it is always best to work with an
independent mortgage adviser to find the best lender for you based on your deposit and your unique
Tagged as: buytolet, deposit, first time buyer, first time buyer deposit, home, house, house deposit, mortgage, mortgage advice, mortgage application, parents, residential
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