LTV Confusion re: mortgages!

lindseyo87

I'm so confused!

I am currently renting a property privately through family but looking to buy the house. It is worth around £160,000 but I will be buying it for around £100,000 as my partner and I renovated it ourselves so we're getting it cheaper.

I have no deposit to put down as I have a young son and spent our savings preparing for him, and seen as the amount I want to borrow is much less than the property value, can I do this?

I don't really understand what the mortgage deposit is for, is it a downpayment to sellers or does it go to the bank I'm borrowing from?

I just don't know whether in this situation I need a deposit as the house value far exceeds the loan amount, or whether it makes no difference and I'll still require a deposit.

If anyone can help it would be much appreciated.

TrickyDicky

The loan to value is the ratio of mortgage amount against the amount of savings you put towards the purchase yourself. At £100,000, a LTV of 90% would mean you purchase the property with £10,000 of your own money and £90,000 from the bank.

The LTV is taken either from the bank's property valuation or the purchase price, whichever is the lower. So even if its valued at £160,000, if you buy it for £100,000 the bank will use the £100k figure when offering you a loan, which in current market conditions would be a maximum of £90k for a 90% mortgage (assuming you have the income to cover that).

Basically without any savings of your own, you have no chance of buying a property.

beecher2

The only possibility I can think of is that you sell the house. If you get £160,000 for it, would your family give £60,000? Then you could use that as a deposit for another house. The only other option is saving up £10,000 plus fees etc.

VIGILANT22

TrickyDicky wrote: »

The loan to value is the ratio of mortgage amount against the amount of savings you put towards the purchase yourself. At £100,000, a LTV of 90% would mean you purchase the property with £10,000 of your own money and £90,000 from the bank.

The LTV is taken either from the bank's property valuation or the purchase price, whichever is the lower. So even if its valued at £160,000, if you buy it for £100,000 the bank will use the £100k figure when offering you a loan, which in current market conditions would be a maximum of £90k for a 90% mortgage (assuming you have the income to cover that).

Basically without any savings of your own, you have no chance of buying a property.

Ask a friend/family/colleague to refer you to a whole of market adviser who they have used and been happy with...then ask them to discuss a Concessionary purchase with you

MortgagePerson

You might be able to purchase the property as a sitting tennant so in that case you will not require a deposit Look upon it as a RTB purchase

herbiesjp

If the family member is selling to you at £100k instead of £160k then they are in effect gifting you the £60k - and that is your deposit.

As long as your other circumstances fit lender criteria you will find lenders that can help with this.