Mortgaging at market value not at price paid.

aday

Hi,

A friend is looking to sell his house quickly to clear his debts. He currently rents it to another friend. Houses in the street have sold in the last year approx 25% more than he wants for it.
I was wondering, is it possible and legal to raise a mortgage against the property at the potential higher value but only paying the lower amount, therefore the LTV is 75% and negates the need for a deposit through the equity in the property?

This would be my 2nd property and I would be looking to continue the current rental arrangement so it would need to be a BTL mortgage.

Sorry if this type of question has been asked previously, I have tried to search for similar threads.

Thanks in advance,

VIGILANT22

No...........Yr not the first to think of this!

TrickyDicky

Banks will give you mortgage based on purchase price or valuation - whichever is lower.

Cannon_Fodder

The price paid IS the market value.

Conrad

Only a high charging specialist lender might do this but you'd need an additional cash deposit of your own aswell because such lenders can only go to about 65% MAX.

Thier rates are about 18% or so as they know you will leave them within months. Fees circa £5000.

g_attrill

I believe some will accept "gifted equity" from family, possibly friends too, but it will need a valuation that it is genuinely worth more than the purchase price.

edit: Doing a quick search I think you might have a problem, only a few lenders offer this and only between blood relatives.

Thrugelmir

Selling a property at a discount of 25% would have buyers flocking round.

Trying to transfer assets at under value is detectable, and the transaction can be reversed.

aday

Thanks for all your advice....pretty much as I'd suspected. I was hoping i could keep any risk off my existing property and lump it all on the new one.

Cheers.