Gatehouse Bank has updated its criteria to remove deposit requirements for Home Purchase Plan (HPP) customers who are buying a home at undervalue from a family member using discount family purchase.
A Home Purchase Plan is a Shariah-compliant alternative to a mortgage.
Previously, the Bank required customers who were buying a property in this way to contribute a minimum 5% deposit from their own personal funds. Gatehouse Bank will now accept HPP applications with no minimum deposit requirements up to a maximum finance-to-value (FTV) of 75%.
In practice, this means that a customer wishing to buy their parents’ home for £225,000, with the property holding a market value of £300,000 will be able to access the full £225,000 finance required from Gatehouse Bank. The £75,000 difference between the market value and the purchase price is treated as gifted equity and used in lieu of a deposit from the customer’s own funds.
Applications remain subject to a surveyor confirming the true market value of the property and customers must meet standard affordability criteria independently.
Gemma Donnelly, 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.”
