Overcoming The First Time Buyer 'Big Mortgage Deposit' Problem

In certain cases, money saved through negotiations on a property can be used as a "Vendor Gifted Deposit", saving money on big mortgage deposits.

Here is an example of how a deal such as this would work: Let's say that you find a property advertised at £90,000. It would certainly value at this price but you manage to negotiate a buying price with the vendor of £75,000. What you now need to do is get the seller to price the property in the sale contract at £90,000 and give you £15,000 back at completion.

The net result is that you have a mortgage for £75,000 as you would have always done; the vendor receives £75,000 as they would have always done, however now the bank is satisfied that the need for a deposit has been met.

When organising a vendor gifted deposit, there are two rules which must be met. Firstly, not all banks accept this method of providing a deposit - so you must find a bank/lender that does. Secondly, the surveyor must agree that the asking price is fair. In other words, you cannot over-inflate the asking price to make it look like a deposit is there.

Vendor gifted deposit is the easiest way of purchasing a house if you don't have at least a 5% deposit to put down.