Im in the process of saving for a deposit to buy my grandmothers house. The house has been valued at £145000 but she's going to sell the house to us for £125000. Ive spoken to a mortgage advisor who has told us doing this will limit us to specialist lenders only.
We also enquired about using the difference between what we are paying and the valuation as a 'deposit' (obviously we wouldnt actually have that money but were hoping we could say we'd paid her that money, if that makes sense) He told us that was impossible to do, even though countless people have told us about doing it!

Any ideas?
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I cant see any reason why your gran cant pay the deposit for you. So you would mortgage the house at the valuation of 145 thousand less the deposit which your gran promises to pay. So she still gets her 125 for it.
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just tell the morgage company you have a £145k house to buy but only need a 125k morgage which is a 86% morgage some lenders do 100% or even 110%

the morgage lender will value the house correct ie 145k, so the bank will lend you 125, which is paid to your gran

the fact that you are getting the house 20k below market value does not matter to the lender, all they care about is risk

if you were to default on payment they would get the money back
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quote:

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Originally posted by nightstar_:
just tell the morgage company you have a £145k house to buy but only need a 125k morgage which is a 86% morgage some lenders do 100% or even 110%

the morgage lender will value the house correct ie 145k, so the bank will lend you 125, which is paid to your gran

the fact that you are getting the house 20k below market value does not matter to the lender, all they care about is risk

if you were to default on payment they would get the money back

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Was the advisor affiliated to anyone? or completely (lol) independent?

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No, he was independant.
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I think what the advisor may have meant was that on land registry the house would have to say 125k and not 145k, the bank would therefore lend you 125k, which would be 100% mortgage, i dont think you would be able to under value it, or your solicitor wouldnt be able to do that, but if you got a mortgage of 145k with the ability to over pay then you could just pay the 20k straight back to the bank, your solicitor has to act on your and the banks behalf, they also distribute money owed to land registry which would want 1% of your purchase price above 125k i think.
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The mortgage advisor is correct, anyone selling a house openly or knowingly below market value will be penalised by the lender,

You can get at most a 5% vendor deposit which some lenders accept, and some dont, eg..halifax accept 5% vendor deposit, most other lenders will simply value the house at the purchase price ...ie...125k not the 145k value of the house...

the only way around it that i can see is if the house is put up for sale at 145k and you put in a offer of 125k if this is then accepted you can add the 5% vendor deposit and then put it through with halifax at 95% loan to value...otherwise your paying high interest rates..

if you need any more advice just pm me and i will look into it for you as i work as mortgage consultant...
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quote:

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Originally posted by johnnymomo1:
The mortgage advisor is correct, anyone selling a house openly or knowingly below market value will be penalised by the lender,

You can get at most a 5% vendor deposit which some lenders accept, and some dont, eg..halifax accept 5% vendor deposit, most other lenders will simply value the house at the purchase price ...ie...125k not the 145k value of the house...

the only way around it that i can see is if the house is put up for sale at 145k and you put in a offer of 125k if this is then accepted you can add the 5% vendor deposit and then put it through with halifax at 95% loan to value...otherwise your paying high interest rates..

if you need any more advice just pm me and i will look into it for you as i work as mortgage consultant...

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I forgot to add, i have actually got an £8000 deposit.

Does this make a difference (apart from the obvious loan amount)??

Thanks.
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it can do, just depends on the lender, for instnace if you had the max 5% vendor deposit then added another 5% deposit then you may get better deals, off the top of my head I dont think it would make much difference to the rate you would be given, if you just used your mey as the deposit then you would have more lenderes to choose from, but you would then lose the 5% vendor deposit,.....the questions you need to ask yourself are.....

1. Can you afford to put your own money into the mortgage or do you want to use it for other things...eg...fees, decorating paying debts,, etc etc...
2. do you want the cheapest possible deal....either by adding the deposit to the vendor deposit...ie..less mortgage lower payment....or using your cash and choosing a cheaper lender with no vendor deposit...

if you want me to get you some figures together let me know and I can find out for you on monday and give you some options....
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sorry didnt read the first bit,

I would nt necessarily go through an estate agent, as they will charge upto say2% of the purchase price and the price of a home information pack, a private sale is just as good, ill check out whether your grandmother will need to get a home info pack...I am not too sure whether she does or not. she can put it up for either the 145,000 and you put in an offer of 125,000 or she can put it up for 125,000 + 5 % which you can then deduct as the vendor deposit... then add your deposit...or any of the options i just posted.

she could put it up for sale with an estate agent and get them to do the hip, maybe cheaper than getting one done herself....you dont have to offer through the agent, they generally only get paid if someone goes through them to buy the house, ....a couple of options there but prob the best one is the private sale, as the estate agency may smell a rat and try to get some money
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Ok, if im honest im getting a bit confused with the options! LOL.

What im looking at doing is a private sale between me and my grandmother, she puts it up for £125k i pay her the full amount along with an £8000 deposit. Would lenders accept this or would it still cause a problem because in their eyes, we're still getting 20k gifted to us?

Thanks for the help.
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should be ok as long as you are valuing the house at 125k not 145k....you only need 5% deposit whether it be a vendor deposit or your own...

people are reducing house prices anyway so it should go through ok
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just to clarify m8,,,,

are you paying 125k in total or 125k plus the 8k....just a bit unsure from your last post.....if it is 125k in total then just get a loan for 125k less 5% which you can then use your deposit to add up to 125k, anything over 125k may be subject to 1% stamp duty
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