Selling house - buyer wants gift on price! - advice needed

lone_saver

Hi, I hope someone can give me some useful advice.
I am trying to sell my house and have received an offer, but buyer wants a "gift" - which turns out to be - they want me to say I am getting full asking price for house, but they are paying a few thousand less (approx 9%), apparently the difference being part(?) of their deposit for mortgage! What I am bothered about is: 1. Is this legal, and 2. When their lender does the valuation it could be (probably will be I would guess) down-valued and they don't get offered full mortgage they need to complete (I don't know figures - not my business apparently!). Then I am back to square one, and have possibly incurred solicitors fees in the meantime for non-sale. Estate agent thinks I should run with it for now in the absence of other interest in house. He says it's the buyers' Financial Advisor who is behind this.

densol_2

Its mortgage fraud and an imprisonable offence-their LTV will be vastly wrong ( too high) and their is no way either than your solicitor should touch this with a barge pole:eek: Run now very fast and don't look back unless they can honest. They are the sort hat would do you on exchange as well and demand a reduction at the last minute.

I am agast at the agent and so called financial advisor !!

tuggy

I would say its not your problem, if they want to take on a mortgage they cant afford (technically) then you have the ££ by then, you've sold it. Not ur problem as i said...if they want to do this.!

Cazza

It's only mortgage fraud if the mortgage company don't know what is happening.

TBH, I doubt this will work. 18 months ago, this was common practive in the New Build industry, it is exactly how builders managed their 5% gifted deposit schemes. However, even back then, 5% was the most that was acceptable to the high street lenders and it was usually only acceptable when it was a new build property, lenders would usually accept it from a private vendor, like youself.

In the current climate, I think the purchaser and their mortgage adviser are trying to be a little bit "clever". On the one hand what they are doing is (probably) wrong. On the other hand, you want to sell your property and these people want to buy it. So, you could always get your solicitor to draft a letter to their solicitors confirming that you are happy to sell the property to them for £100,000 and that you will provide £9,000 as a gifted deposit and that you trust their mortgage lender and valuer will be informed accordingly. Their solicitor is obliged to tell the mortgage company, so if it backfires that's the purchaser's problem and if it doesn't, at least you've sold your house and whatever the purchaser has done is their problem.

Comyface

I agree, the valuer acting for the mortgage company does need to be informed before he goes out. He'll then take the gifted deposit into account when providing his valuation figure.

Robert_Sterling_3

"Conspiring to obtain a pecuniary advantage by deception" is the crime." If you are lucky you will only get a suspened sentence.

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This P.S. Was edited in later after I read Cazza's post below..

Not that you are considering doing this but just in case someone else wants to know.

Cazza

But you're not conspiring as you have instructed your solicitor to inform their solicitor, in addition, when the valuer came round to do the survey, you confirmed the purchase price and gifted deposit situation with them

russ21282

Don't listen to those saying it's illegal etc it is perfectly above board as long as their mortgage company knows and the house valuation is correct.

There are only a handful of lenders who will accept vendor paid deposits. I know halifax do as we are doing exactly that with them. We have a 5% vendor gifted deposit and have our mortgage offer from them.

silvercar

It only works if the valuation comes in at the higher figure. If the property is valued lower then the percentage loan to value is calculated on the valuation. If this happens then your buyers are stuck. While you have no other buyer it can't do any harm provided your solicitor is kept informed. The buyers mortgage application is down to them, you are not completing it, so I wouldn't worry. So that you don't incur solicitors costs unnecessarily ensure your solicitor mentions it to your buyers solicitor.

densol_2

........they want me to say I am getting full asking price for house, but they are paying a few thousand less (approx 9%), apparently the difference being part(?) of their deposit for mortgage!.......

The above kind of suggests the purchaser doesn't want the mortgage company to know !! They are telling their mortgage company they are buying a house for say £100,000 and want 90% mortgage ( thus £90,000) - when in fact they are buying the house for just £90,000 and are in reality get a 100% mortgage. Not the risk the mortgage company would like me thinks.

Saying you are selling for £100k and gifting the deposit of £9000 is fraud in these circumstances, as you are not! This is NOT a new build situation. If you take part in this conspiracy is fraud ( by the way Percuniary advantage was replaced by the new Fraud Act). I would have no hesitation in signing an Indictment for this and I am simply amazed that individuals on here suggest ways to be complicit in this fraud.

But of course what do I know.....

silvercar

Generally the seller doesn't get involved in the mortgage application of the buyer. The buyer makes his own application, with the knowledge of his broker and solicitor. If anyone is committing fraud it would be the buyer, if and only if they failed to mention the gifted deposit.

The only risk to the seller is that the buyer fails to secure a mortgage due to needing to inflate the purchase price and associated deposit. So the only real risk to the seller is that they lose marketing time if the sale doesn't proceed and may waste legal fees if the sale doesn't complete. Both are risks with any buyer but may be increased with a buyer with little deposit.

This is little different to a buyer obtaining a bridging loan to purchase and then (as owner of the property) doing a remortgage. The amount lent would be based on a the property valuation.