Gatehouse Bank has removed its minimum deposit requirement for Home Purchase Plan customers buying a home at undervalue from a family member.
The bank previously required customers using discounted family purchase to contribute a minimum 5% deposit from their own funds.
It will now accept Home Purchase Plan applications with no minimum deposit requirement, up to a maximum finance-to-value of 75%.
Under the change, a customer buying their parents’ home for £225,000, where the property has a market value of £300,000, could access the full £225,000 finance required from Gatehouse.
The £75,000 difference between the market value and the purchase price would be treated as gifted equity and used instead of a deposit from the customer’s own funds.
Applications remain subject to a surveyor confirming the market value of the property, while customers must meet Gatehouse’s standard affordability criteria independently.
Gemma Donnelly (pictured), head of customer propositions at Gatehouse Bank, said: “We regularly review our product offering to ensure they are best suiting the needs of our customers and helping people to achieve their homeownership goals.
“We believe that today’s changes will remove an existing barrier to those looking to take their first step, or move up, the property ladder through the support of family members while also increasing our competitiveness within the UK home finance market.”
A Home Purchase Plan is a Shariah-compliant alternative to a mortgage. Discounted family purchase is when a property is bought below market value from a family member, with the difference treated as gifted equity.
