A mortgage broker has revealed a case where a first-time buyer was turned down by a major high street lender despite having a substantial £40,000 gift from family, representing 14.5% of the property's value. The rejection highlights the unpredictable nature of mortgage lending, particularly regarding family contributions.
The Rejection
Broker Gaurav Shukla of Home Me Mortgages explained that his client, earning £50,000 annually, sought a £275,000 property with no credit issues. The lender rejected the application despite the sizeable deposit. Shukla expressed surprise, noting that many buyers succeed with only 5% or even no deposit.
The client then added £20,000 of personal savings, reducing the gifted portion to £20,000, but was rejected again. The lender cited high loan-to-value ratios and claimed the buyer had only a small personal stake.
Inconsistent Lending
In contrast, a rival high street lender immediately approved the mortgage with the full £40,000 gift. This exposes the inconsistency among lenders regarding family financial assistance. The case underscores that having sufficient funds does not guarantee approval, as lenders' policies vary significantly.
Brokers advise first-time buyers to seek advice and shop around, as some lenders are more flexible with gifted deposits. The housing crisis has made it harder for buyers, but this case shows that even substantial help may not suffice with certain lenders.
