100% mortgage if value is higher than sale?

ADSrox0r

Hello

This might be a thick question so be gentle.

My father is selling me and my partner our family house for £100k. It's value is somewhere around 130k (it's his wedding present so to speak). My partner and I do not have any deposit. Is applying for a £100k mortgage when the value is £130k classed as a 100% mortgage since the sale is for 100k only?

Joe_Bloggs

You will have approx 30% equity so you need not go for 100% mortgage deals. You will need a conveyancing solicitor to handle the legalities in any event, so look into getting one . Get your papers in order as it is still lot of money to borrow. Are your earnings/debt situation enough to qualify for a 100K mortgage ? Perhaps wait for further advice on this forum and post more earnings/debt specifics.
J_B.

AndrewSmith

Good question and you are not being thick. I have one of these going through at the moment actually.

It is something called gifted equity, and as long as the equity is being gifted by a blood relative then it is perfectly do-able as a 76% mortgage based on a value of £130,000.

You will be somewhat restricted asto which mortgage companies will accept this type of gifted equity however the rates available are comparable with most others you would find, and it has to be better than a 100% mortgage.

All perfectly legal and above board.

Hope this helps

Andy

ADSrox0r

Blimey that was quick, thank you.

Our income is me:23,050 p/a (with current employer 6yrs) partner: 8,500 p/a (with current employer 1yr)

Our current debts me: £950 across two credit cards, partner: nil.

Credit history me: I have a default registered from Barclaycard. It is dated 5yrs ago (sum £1900) but I am disputing this being on file with Barclaycard at the moment since there are some serious discrepancies in the records and wether it should be there any more. I'm hoping to hear from them shortly but we are not banking on it being removed. Otherwise I have a clean financial history for the last 6 years. Partner: clean.

Savings: We have about £1200 stashed away for fees etc, putting £190 to it each month.

Affordability: If we take the £190 out of the equation we are left clear with around £400 p/m after all bills, expenses, pension and savings etc (we currently pay £600 p/m 'rent' to my father)

Thank you for taking the time to give us advice, it is appreciated.

AndrewSmith

On the face of it with the given figures it shouldn't be too much of a difficulty. The only stumbling blocks you will need to overcome are:

1) Ensuring that the lender and solicitor are fully aware that it is a gifted deposit scenario from the outset.

2) The default may cause a slight hiccup however if the rest of the case, and your credit score are ok then it shouldn't be too difficult.

Hope this helps

Andy