Builder / Vendor Gifted Deposits: All incentives should be disclosed to the valuer as part of the application. The valuer will consider the total property valuation recognising incentives; standard RICS process.
It is acceptable for a builder/vendor to provide cashback or contribution towards the deposit, provided that (i) the incentive is disclosed appropriately and (ii) the value does not exceed 5% of the purchase price or valuation, whichever is the lower.
If the cashback/deposit is greater than 5%, the excess will be deducted from the price and our lending will be based on the reduced value.
Irrespective of builder/vendor cashback/gifted deposit, the Society expects a personal contribution from the buyer of at least 5% of the gross purchase price or valuation, whichever is the lower.
Family Purchase: Where the property is being purchased from a close family relative (who must be a resident in the UK and will be subject to routine bankruptcy searches) and therefore sold at a discount to the market value, the Society will consider lending up to 100% of the purchase price. The LTV for product selection will be calculated using loan amount as a percentage of open market value.
The Society will not consider applications for simultaneous capital raising / home improvements.
Gifted Family Deposit: Gifted deposits from family members as defined by the regulator (spouse, parent, grandparent, sibling, child or grandchild) will be considered. The individual gifting the deposit must be resident in the UK and will be subject to routine bankruptcy searches. The Society requires completion of the ‘Gifted Deposit Form’ which can be obtained from our web site and should be submitted with the application.
Accelerated Deposit Schemes: A deposit saved using an Accelerated Deposit Scheme is acceptable provided the arrangement is with a Registered Housing Associations, Registered Social Landlord, UK Government or Local Authority. Subject to the following:
- The scheme only assists with deposit requirements, not overall mortgage affordability.
- The Society has first charge over the property.
- There is permission for the mortgagee to sell without restriction either immediately or as part of an acceptable cascade arrangement. (See section 12.2 Restrictive Covenants for these).
- Any clawback on the deposit must be stated up front and not continue for a period in excess of five years.
- We will not accept schemes where there are non-removable restrictions on what happens in possession
All incentives should be disclosed to the valuer as part of the application UK Finance Disclosure Form. Financial incentives up to 5% of the full purchase price are acceptable in principle. Please see below the types of financial incentives that would/ would not be acceptable:
- Acceptable: Legal Fees, Stamp duty paid, Estate Agent Fees.
- Unacceptable: Deposit paid by seller, Cash or cashback, Mortgage subsidies.
Non-financial incentives such as property upgrades i.e. carpets, kitchen appliances, white goods, fitted furniture, landscaping and Builders Options vouchers (that are to be used on property upgrades) are acceptable in principle and will be considered on a case by case basis.