First time buyer

smilemoneyexpert

I am buying my parent's property below market price - £150k. Market value is £400k.

I have a few quick questions.

(1) Do I still need a deposit of 25% to get the best rate? Deposit of £37.5k from 150k.
(2) Is stamp duty calculated at market value or at the price I'm buying at?

Thanks for your help.

jamief

smilemoneyexpert wrote: »

I am buying my parent's property below market price - £150k. Market value is £400k.

I have a few quick questions.

(1) Do I still need a deposit of 25% to get the best rate? Deposit of £37.5k from 150k.
(2) Is stamp duty calculated at market value or at the price I'm buying at?

Thanks for your help.

Yes, you'll still need a deposit.

As far as I know, stamp duty is calculated on the sale price.

not_tonight_josephine_2

would you really need a deposit from all lenders for this? I thought there were still lenders who would consider the £250k equity as a "gifted" deposit

I believe there may possibly be inheritance tax implications if your parents were to pass away within 7 years (horrible thought, apologies!), and they may also be seen as having deprived themselves of an asset if they need care as they get older?

Milliewilly

You need to be careful as what you are doing will be viewed by HMRC as avoiding stamp duty as you say the property is worth £400K.

HMRC don't know that you aren't paying your parents the £250K in cash do they? Also if there are similar properties nearby and yours shows as £150K compared to neighbouring at c£400K you need to have a good reason why.

Your mortgage valuation will be based on market value too so this may raise problems with the lender?

betmunch

I would be confident of finding you w lender that will sort this out for you without the need to put your own money in, however as I havent had a case like this for a while I am not 100%

Get yourself in front of a good mortgage broker who will do the work for you, I think you will come up trumps.

With regard to the Tax Implications, including Stamp Duty I cant help I'm afraid!

Cheers

Batchy

The valuation will be calculated by a survey for the mortgage! LTV is the calculation, not specifically a "deposit".

so you can't artificially inflate the price to make the LTV lower. But if the survey comes in with a high valuation then its all good.

Although for stamp duty purposes you might have other problems

herbiesjp

There is no problem at all with this scenario

Nothing illegal

Just get in contact with a good whole of market adviser who will be able to find a lender very quickly for you