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BTL Gifted Equity Deposit
This case study looks at a customer who wanted to gift the equity of a property to their adult child.
A client contacted Balanced who had a portfolio of properties. This client wanted their child to get a start in Buy to Let and wanted to transfer one of the Buy to Let properties to their child. The property was currently mortgaged to a lender who would not allow any changes to the current mortgage and this mortgage needed to be settled before any transfer. The recipient of the property did not have the cash funds available to put their own cash deposit down.
Main lender concern with the case
The deposit source was to be an equity gift of 25% of the value of the property
The applicant was not an owner-occupier but was a mortgage holder
The property was non-standard construction
Applicant was a first-time landlord
Many lenders require first time landlords to be owner occupiers and will not consider non-standard construction property for Buy to Let. They often also require that the deposit is cash from the purchaser’s own funds, or a cash gift from an immediate family member.
Each of the points above reduced the number of lenders who would consider this case.
Balanced Financial Services identified a lender who would be able to consider this case, and we were able to arrange an appropriate Buy to Let mortgage using a gifted equity deposit (meaning the recipient of the property did not have to raise or find a cash deposit). The transaction completed as a sale from the current owner and a purchase to the recipient ensuring all taxation was accounted for correctly. The new mortgage cleared off the previous mortgage outstanding against the property and the recipient of the property was able to complete the transaction as a standard Buy to Let purchase.
We go the extra mile on complex cases as standard.
This was possible due to Balanced Financial Services excellent relationship with lender Business Development Managers and our open and honest and up front approach with underwriters.