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What is a Deed of Trust?

January 10, 2022 12:45 pm

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When you are looking to buy a property, the deposit is one of the essential elements that you have to have. For example, the average house price in Britain has risen again recently to £250,000. This means that you will have to have at least £25,000 in savings to put down. There are some exceptions to this if you use schemes and help to buy, but even then, a five per cent deposit still equates to the large sum of £12,500.

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This is why the gifted deposit is one of the most common types being seen increasingly in the mortgage market. Most lenders are particular that it has to come to form immediate family or the Bank of Mum and Dad as it is informally called. The gifted deposit has to be just that, a gift. It cannot be a loan as the lender will not accept it. So there has to be a legal agreement signed by those doing the gifting that they will not be requesting this money back.

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However, it may be the case that one party is contributing more than the other. To make sure this is returned, a deed of trust is created so that if the property is sold, the deposit is repaid in full to the people who lent it, or a more substantial portion goes to the party whose relations gave the most. This is most common if the relationship breaks down and the property has to be sold as the other party cannot afford the mortgage payments. So you’ll need Ascot solicitors Parachute Law to help with that.

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