What is a Vendor Gifted Deposit?

In certain cases, money saved through negotiation on a property can be used as what's referred to as a "Vendor Gifted Deposit".

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 who does. Secondly, the surveyor must agree that the asking price is fair. In other words, we cannot over-inflate the asking price to make it look like a deposit is there.

At the moment, Bank of Scotland and Woolwich will still accept a 5% vendor gifted deposit, whereas Halifax will still do 10%. It is widely thought that this loophole will be closed in the near future.

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

If you don't have a deposit then I would recommend using the Vendor Gifted Deposit method. Note though that the banks who allow this will not allow unlimited over payments - just 10% per annum. Therefore you need to reduce the term at the outset if you'd like to get your mortgage finished as early as possible.

Ross Taylor is the author of "Money, Mortgages and Magic" and "The No B.S. Credit Crunch Ready Guide to Buy to Let in 2008". Ross is a successful Financial Adviser specialising in First Time Buyers and Buy to Let. He owns over £2million worth of property in the UK and regularly gives lectures on Financial Planning. To read more by Ross please visit http://www.uncommonadvice.co.uk

Article Source: http://EzineArticles.com/?expert=Ross_Taylor

www.uncommonadvice.co.uk is proved right yet again!

A report released today by the National Housing Federation has put forward the view that the average house price in the UK will rise over the next 5 years by 25%. before you say it, this report was not drafted by council lefties but rather Oxford economists. They predict that house prices will fall by 2.1% in 2009 and then increase by 1.3% in 2010, 5.2% in 2011, 9.2% in 2012 and 9.3% in 2013.
The Chief Executive of the federation stated that, "..... despite concerns about the current market downturn, house prices will resume upwards". All markets abide by the rules of supply and demand, so lets look at the basics:

• the total number of new homes expected to be completed in 2008 is likely to be 120,000 against a government target of 200,000.
• one in every 4 local authority areas has seen its housing list double but the slowdown in newbuilds means that there is less public housing coming on stream.
• 1.5million people in the UK live in an overcrowded house.
• 73,360 households are officially homeless.

Mark my words 2008 is going to be remembered as a blip in an otherwise upwards house price trajectory. Therefore, it is of vital importance for First Time Buyers to act now - especially in the areas where it is still possible to get a 3 bedroom property with parking for less than £125,000; namely, the North East, the North West, the East Midlands and the West Midlands.

The fundamentals are still in place. It is simply the case that a herd mentality has spread across the country. Don't wait to buy property - buy property then wait! Mark my words