Accumulating a deposit during periods of high inflation can be difficult, and financial gifts from relatives often determine whether a purchase proceeds. However, broker Gaurav Shukla of Home Me Mortgages told the Daily Express that certain lenders do not always accept gifted deposits, even when they are significant.
Shukla described a client who was rejected by a major high street lender despite a gifted deposit of £40,000 on a £275,000 property — 14.5% of the value. The client had no bad credit, earned £50,000 a year, and was borrowing at 5.5 times income. After the first rejection, the client added £20,000 of his own savings, reducing the gifted portion to £20,000, but the lender still declined. The lender cited high loan-to-value (LTV), enhanced affordability, and being a first-time buyer with a small personal stake. Shukla disagreed, arguing that the LTV was not high and that £20,000 on a £275,000 property is not a small stake. He then switched to a rival high street lender, which promptly approved the mortgage.