is it legal???

ballyclover

hi

i currently rent my home from my sister who purchased the house as an investment before moving abroad.

The situation is that i would like to buy the home and she agrees this is ok, however i have a poor credit history and know i would require a 10% deposit in order to even be considered.This is money i do not have,

So my solution to this is simple but it it legal.

My sister wants for example £100,000 for the home. I ask her to offer to pay my 10% deposit, she asks £110,000 for the home. I ask the morgage company to loan me 90% which is roughly £100.000.

She gets the price she really wants, the morgage company beleive she has paid 10%, when in fact she has paid nothing.

now i know this sound like fraud, but is it possible????

Alternativly how hard would it be to have my name added to the morgage?

thank you

feisty1

Quote: now i know this sound like fraud,

If you think it is a duck, well then it is ...........a duck!

ballyclover

yes but is it possible, do people who offer to pay deposits actually do this, why cant she ask more for the house and cover the cost of paying deposit

blueberrypie

The mortgage company will almost certainly want to value the house. If they agree to fund you for 90%, but then value it at £100k, they'll lend you 90% of that. And if they suspect you're up to anything dishonest, they'll quite likely decide not to lend you anything at all.

If the house is worth more than £100k, you don't need a 100% mortgage (which is in effect what you're trying to get if you do what you suggest).

hearts

You would still need to have the 10% in the bank. I think they will ask to see the funds. I have done something similar in the past. ( Although not the same and legal) I had to lend a friend who was purchasing a property from me the 10% to show he had funds.

Ilian2008

Hello. Solicitors acting for the lender are under instructions from the lender to hand over to the seller the full purchase price on completion and if that is not the case report it to them. The lender may want to see proof that it has been paid over so that is one obstacle

silvercar

sounds like a vendor gifted deposit. Often done by new build developers.

Works if the gifted deposit is declared to the lender and the property value is high enough to include the "deposit".

luckyfool

As silvercar says, vendor gifted deposits are acceptable subject to the valuation stackingup with some lenders. It's more likely to work if there is a valid reason for the person giving you the vendor deposit, e.g. a blood relative such as in this instance, or if it had been a landlord to a long term tenant.

Your problem is going to come with your credit history. If your credit history really is poor (i.e. defaults/ccjs etc) then you have zero chance of getting even a 90% mortgage in the current market.

dunstonh

Gifted deposits are fine if disclosed but the way it is written in the OPs post is valuation fraud potentially.

As long as the correct value is used on land registry and the amount of the gifted deposit is declared then no fraud has taken place.

ballyclover

okay, how much fuss is it just to add my name to the mortgage?

this way gives me a little security without having to buy it outright, and eventually we could remortage,my sister takes her profit and signs house over to me....

jamesd

Go with the gifted deposit approach and repay her the amount of the deposit as fast as you can. You've ample reason for a lender to accept this, it's just a case of how much they will want the deposit to be - that is, how much less than their valuation they will be prepared to lend.

She'll get a big lump sum from the mortgage company and some ongoing payments from you to pay off the gifted deposit amount.

However, it can be hard today for even those with excellent credit to get a mortgage, so this part may be the bigger problem.