The Leeds Building Society has moved to simplify its policy on gifted deposits for new build homes following feedback from intermediaries.
The mutual has been working with brokers and housing developers to review and refine its position on gifted cash deposits, where builders offer buyers cashback or a contribution to the purchase price.
In future the Leeds will accept cashback or a developer contribution as long as the value does not exceed 5% of the purchase price or valuation, whichever is lower. If the cashback or contribution is greater than 5%, the excess will be deducted from the price and the home loan size will be assessed on the reduced value.
Irrespective of the amount of the gifted deposit, the buyer or buyers must contribute at least 5% of the gross purchase price or valuation, whichever is the lower. In addition, the cashback or contribution must be disclosed to the valuer as part of the mortgage application.
Martin Richardson (pictured), Leeds Building Society’s general manager for business development, said: “Cashback from a developer, or a contribution towards the purchase price, is a common factor with new build properties and we’ve responded to comments from our broker partners to simplify the details on this.
“This change aligns us with Halifax and Nationwide, who are the other major lenders in this sector, and should provide intermediaries with greater clarity when dealing with this type of new build purchase.”