First-time buyers purchase parents’ house with gifted equity

We were approached by a couple – first-time buyers who needed a mortgage to purchase a 3-bed house in Derby. The couple were buying the house from the husband’s parents who were gifting them 10% of the equity in the property rather than help them with a cash deposit.

This is known as a concessionary purchase which not all lenders will consider.

To add to the complexity of the case, the wife, who is Canadian, lives in the UK on a spouse’s visa which is not popular with many lenders -  most prefer applicants with a permanent right to reside. However, she does have a permanent job as a shop assistant earning £12k a year. The husband is a self-employed delivery driver earning £25k a year.

We took the case to a high street bank which we know accepts concessionary purchases and will consider lending to applicants on a variety of visas.

Both the husband and wife have good credit profiles and could easily provide proof of earnings to support their mortgage application. The wife’s visa was also available for inspection but in this instance, it was not requested because her credit profile was so clean.

Subsequently a formal mortgage offer was issued to the couple at just over 4.5 times their joint income with no lender arrangement fee.

Here are the details:

Property Details

Property value: £165,000

Loan amount: £148,500

LTV: 90%

Rate: 3.14% 2 year fixed rate

Term: 35 years capital & interest

Mortgage payment:  £582 pcm

Lender arrangement fee: Nil

Consultant: Erin Gallacher, 01625 416392

11th September 2017