Bank of Mum & Dad – An Alternative to Gifted Deposits

Gifted deposits are on the rise, (Property Industry Eye, Apr 2017). There has been an increase in parents offering financial help to their children in a bid to get them on the property ladder. This can take the form of a gifted deposit which is a non-returnable gift of money forming all, or part, of a deposit. Some parents prefer not to part with their hard-earned money. Below is an alternative, which we endured last year.

It came out of the blue, with no warning.  Our eldest daughter telephoned to ask if she could come and live with us for a year.  And when I say she, I include her partner and six-month old beagle. They had decided that it would be impossible to save for a property and pay rent at the same time.  They were right, of course.  It is a tall order. 

I gave a cautious yes, subject to agreement from Lee, which was by no means a given.  He took it fairly well, then turned pale and went for a long walk. Our daughter is a boomerang child and had already returned home several times since she first left. He was worried that if he let her back in, she would stay forever. 

We entered negotiations with our daughter and decided that both sets of parents would share the load.  They would live with us for the first six months and then with the other set of parents.

There were challenges to overcome.  We have different standards of tidiness and different expectations of dog behaviour.  The beagle considered rules to be something that only applied to other dogs. She took control of the household for the duration of her visit. But six months came and went without any serious disagreements and they moved into her partner’s parents place earlier this year. 

It is now summer and they have moved into their own house and have their own mortgage. They managed to save £12,000 in a year from not having to pay rent. It is more money than we could easily have given and it has been a relatively pain-free way to help.

So, if you have a spare room and limitless patience it is worth considering this option.  If you would rather pay a gifted deposit, than allow your adult offspring to return home ever again, give Lee a call on 01242 673341 for more information.

NB: most banks and building societies accept gifted deposits. They will need a letter from the donor to confirm that they will have no legal right to the money once the purchase is complete.  A word of warning – gifted deposits may have inheritance tax implications. They cannot usually be accepted if they originate from overseas.

 

A Day in the Life of a Mortgage Broker

Its 9.15 Monday morning and the phone is ringing off the hook as it did several times yesterday afternoon.   And despite the fact it was Sunday afternoon, it was answered.  Lee is nothing if not dedicated to his customers which is great for them but less so for me as we had friends due round.  Oh the joys of working from home!

But I digress.  Back to Monday morning & Lee picks up the phone.  It’s a call from a lender.  One of our client’s is depending on the quick arrival of her mortgage offer but the underwriters have decided they need to see further documentation before they can issue it.  Lee phones the client.  She is at work but her mother is home and can retrieve the paperwork but she doesn’t drive.  It’s not a problem though.  Lee considers it part of the service and jumps in his car to collect it.  The client is local so he is back in half an hour and faxes the papers to the lender straight away.

By now there are 5 messages on the answer phone.  Two are from potential new clients.  Lee phones them back immediately and takes detailed notes of their requirements.  One is a first time buyer and completely new to the mortgage process.  Lee was an estate agent before he was a mortgage broker so can easily give his young client the guidance he needs.  Lee already has an 8.pm appointment tonight but the first time buyer has seen a property he likes so Lee arranges a home visit for 6.30.

The second call is from a previous client.  He is purchasing another buy to let property and his wife recently gave birth to their third child so he wants to increase his life cover.    Lee takes ten minutes for a chat (they always got on very well) and arranges to pop down to Bristol on Thursday to complete the paperwork.  

“Don’t forget to discount the fee,” he reminds me. 

We discount our fee by 50% for first time buyers and for any customer who uses us more than once – loyalty is a big deal and should be rewarded.

“Don’t go via Matala’s” I retort.  There is an Indian spice shop in Bristol that Lee spends far too much time and money in whenever he is down that way.  He is a big curry fan.

The door bell goes and a shadow looms against the glass front door.  It is a one of the Business Development Managers who has come to discuss the latest mortgage products.  Lee puts on the kettle, grabs some digestives and listens.   I watch Lee’s face as he processes the information.  You can almost see the light bulb above his head as he works out which clients could benefit from the new products.

As the representative leaves the postman arrives bringing a couple of mortgage offers.  Lee checks the details and rings the clients with the good news.  One of them asks if Lee can help with her buildings and contents insurance.  Lee sources the best product, calls her back and completes an online application.  She asks Lee if he might be able to help her friend Mike who has just had his mortgage application declined by a high street lender.

Lee telephones Mike, chats for a while then puts down the phone looking grim. 

“He’s had two pay day loans, “he sighs.

We exchange glances.  Pay day loans are the kiss of death to mortgage applications.  It’s a terrible shame that people don’t understand the consequences of taking these loans out. 

“He seems such a nice lad,” says Lee shaking his head sadly.  We both know he won’t be able to help.

It’s now 1pm and Lee breaks his day by walking our grumpy border terrier.  He lets the chickens out and sits back down at his desk for an hour’s admin while the chickens potter past the window.

2pm arrives and Lee prepares for his evening appointments based on the information he has already taken.  He sources a selection of suitable mortgages and is just printing off his recommendations when the phone rings.  It is a lender calling with bad news.  A heated conversation ensues but the upshot is the underwriter won’t allow the mortgage.  Unfortunately no matter how carefully we research, things do go wrong sometimes.  Mortgages are approved in principle but something in the full application may spook the lender and provoke concerns about their level of exposure.  In this case, there has been some undisclosed credit and it has produced an unequivocal “No”.

Fortunately Lee usually researches with a ‘back-up’ lender in place.  He immediately contacts the other lender who anticipates a successful application even with the credit problems and Lee phones the client to explain.  It turns out the client had genuinely forgotten to enter one of his wife’s credit cards on the application but is happy to proceed with the new lender.  Lee books another appointment for tomorrow night to sign the new paperwork. 

Lee spends the rest of the afternoon sourcing bridging finance for one client and public liability insurance for a horse show for another while I man the phones . He grabs a quick bite of tea (curry) and gets suited and booted for his evening appointments.  Just before he leaves, the fax line rings and a mortgage offer churns through.  It is for the client he collected the documentation for earlier in the day so he tucks the mobile under his chin & calls her with the good news as he walks out the door.

It’s 9.25 by the time Lee gets home.  He opens his briefcase and puts both lots of paperwork on his desk ready to process tomorrow.  It looks like he can help both clients so he’s in a good mood.   He checks his email before settling down for the evening television.  Among the new enquiries and emails from lenders is an unexpected and rather heart warming testimonial; a perfect end to a long day.

By Jacqui Beard