mortgage for 78000 possible on 16500 wage?

sdooley

The property is only worth (to most banks, certainly the Halifax) the lower of:

The bank's valuation; and
The price actually paid.

What your estate agent values it at is neither here nor there. You need to save up a deposit; the practical solution is to rent your family member's flat until you can afford the deposit (or until they find another buyer).

There are no more 100% mortgages.

toonfish

yes, you could potentially do this with a family gifted deposit, but not as a 100% mortgage

Leon_W

Speak to a broker.

Quite frankly, if you don't understand how loan to value calculations work then I don't suppose you'll know what Higher Lending Charges are either, which at 95% Halifax will wallop on.

Without this knowledge you'll not realise that you'll practically be in negative equity even with a 5% deposit.

I repeat. Speak to a broker.

Regards

tiredredhead

My sister had a similar problem but they got around it by saying the house was worth more than they were paying.
Speak with a mortagage advisor they will know how this works.

The house is worth £85k you get a mortgage for £78k the difference/deposit doesnt actually exist only on paper. The house has to be valued at the higher figure though.
When my sister did this the surveyor was told the wrong/lower figure and just agreed with it. They had to do some quick renegotiating with seller.
Dont know about this legally i assume it is ok as all parties new about it.
Everyone was happy.
Be careful which advisor you see some get their money via the lender some charge you, ask up front.

Tiddler_2

As toonfish says, it is possible and the Halifax are one of the companies who will consider it as the difference in value and the price being paid does count as your deposit.

However,

1. You would have to pay a Higher Lending Charge, unless you can get the property for £73400 (i.e 90% of the value)
2. Are you sure you can afford the payments, plus the bills (council tax, gas, electric, water, food etc) aswell as having a life?
3. The mortgage company would have to value the property at £78k - if you family member has had it on the market and not had much interest then it is unlikely that the property will be valued at £78k.
4. Negative Equity is a possibility that you have to be aware of, but if you intend living in the property long term, then personally I wouldn't let that put you off. I bought my house (through a family gifted deposit, funnily enough, in 1991 and went into negative equity almost immediately, but it was my home and not a short term investment!)

You could take the mortgage over 40 years at a payment of around £480 p.m at 6.89%, but aswell as the normal bills you need to consider protection if you are off work sick/redundant, buildings and contents insurance.

Another thing to be aware of is that as a FTB with no credit history, you may not pass Halifax's credit score

I would give it serious thought as I think it would be very tight on affordability unless you had a friend (that you trust) living with you to help with costs.

FraudBuster

My sister had a similar problem but they got around it by saying the house was worth more than they were paying.
Speak with a mortagage advisor they will know how this works.

New rules have come into force to stop mortgage lenders becoming the victims of over-inflated property valuations.

http://news.bbc.co.uk/1/hi/business/7592106.stm

loofer

Interesting news

FraudBuster

The Fraud Act 2006.

2 Fraud by false representation
(1) A person is in breach of this section if he—
(a) dishonestly makes a false representation, and
(b) intends, by making the representation—
(i) to make a gain for himself or another, or
(ii) to cause loss to another or to expose another to a risk of loss.
(2) A representation is false if—
(a) it is untrue or misleading, and
(b) the person making it knows that it is, or might be, untrue or misleading.
(3) “Representation” means any representation as to fact or law, including a representation as to the state of mind of—
(a) the person making the representation, or
(b) any other person.
(4) A representation may be express or implied.
(5) For the purposes of this section a representation may be regarded as made if it (or anything implying it) is submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention).

http://www.legislation.gov.uk/acts/acts2006/ukpga_20060035_en_1

firesidemaid

also, can you save the £500+ a month you will be paying out for mortgage in future now to get the deposit.

do lenders still do the scheme where you can rent a room out and include the money from this as income?

toonfish

FraudBuster wrote: »

New rules have come into force to stop mortgage lenders becoming the victims of over-inflated property valuations.

http://news.bbc.co.uk/1/hi/business/7592106.stm

vendor gifting is not "over inflating property valuations" and is generally only acceptable from a close family member who confirms the gifted deposit will not ever need to be repaid, or from a builder. Ultimately the mortgage lenders surveyor will determine the true value