Solution for Obtaining Home Loans Using Family Gift as Deposit

I have had several recent enquiries from clients requiring home loans, but have not been able to obtain a mortgage loan as part, or all, of their deposit had been 'gifted' to them by their family. Some lenders won't accept the family 'gift', so below is a summary of a solution I recently developed for one of my clients.

??Scenario

• The client wanted to buy their first home, with a purchase price of $316,000
• The client demonstrated their ability to meet the proposed loan repayments
• The client had been renting their existing home for about 18 months
• Most lenders required 5% 'genuine savings - in this scenario, $15,800 (5% of the $316,000 property purchase price)
• 'Genuine savings' are defined by most lenders as the borrower having the required savings in their bank account for a minimum period of 3 months
• The client had about $11,500 in their bank account, for a period of about one month, as they had recently received a tax refund payment, and other monies owed by their employer
• The client's parents were gifting them the additional $4,300 required to meet the minimum 5% deposit lending requirement

?Solution

After much research, I was able to find a lender that accepted the client's rental payment history as evidence of their ability to meet regular financial commitments, and therefore they did not require any further evidence of savings history, or any evidence of how the deposit monies were obtained, so the client's parent's gift was perfectly acceptable.

The lender's interest rates, fees and facilities were similar to other major lenders in the market, so the client wasn't paying more for their 'non-genuine savings' deposit.

Of course everyone's needs and circumstances are different, so make sure you seek advice from a qualified professional before entering into any loan arrangement. If you don't have a mortgage adviser, please do not hesitate to contact my office, for a free assessment.