Gift of Equity Deposit
Posted on 5 March 2017 by Reece
Hi, I still live with my parents. My girlfriend and I wish to move out next year. My parents have kindly suggested that they will help us out. Can they release equity from their home to enable my girlfriend and I to use that equity as a deposit on a mortgage? Thank you.
There shouldn't be any reason why your parents wouldn't be able to capital raise on their existing property to then gift you the funds to be used as a deposit for you to buy your first home.
However, you and your parents may wish to look at protecting the deposit monies, via the use of one of the increasing number of "Family Guarantor" schemes, whereby you still use the funds you have to lower the mortgage amount needed, but your parents still retain control of the monies. Basically instead of them gifiting you the deposit, the lender holds the monies and then releases them back to your parents at a future specified date. Some of these schemes also see your parents using their property as a means of guaranteeing your loan.
Alternatively although the mortgage would be a joint one between you and your girlfriend, the actual ownership of the property is set up under a 'Tenants in Common' arrangement, where each party's share of the property is specifically defined, unlike 'Joint Tenants' cases where any equity is a straight 50 / 50 split.
If you would like to have an initial discussion with one of our consultants, to look at the options in a bit more detial, then please let me know and I'll arrange a suitable time for your to speak to one of our consultants.
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