Concessionary Mortgage - Purchase from Mum

angel_nicx

Hi all-

We've been advised to look into a 'concessionary mortgage' but I can't seem to find much about it. The situation is that we're looking to purchase the house from my Mum at pretty much market value (purchase for £76,000) but we have no deposit so have been told that is she were to lower the price to £70000 for example, the reduction could be used as deposit in the eyes of the motgage lenders.

Does this even exist? Any ideas which mortgage companies to take a look at for this kind of loan?

Thanks so much for any help.

Annisele

It might be possible (see here - though those figures are rather different) - but I think it's one you should take to a whole of market broker rather than trying to DIY it.

Apart from anything else you'd have a problem if the lender's valuation came back at £70k - how sure are you that £76k is the market price, and what have you based that on?

Thrugelmir

Mortgage offers are normally made on the basis of the valuation or the purchase price whichever is lower.

zzzLazyDaisy

If I understand it correctly, the purchase price would have to be the full amount (say £76k) but if your mum is willing to gift you the deposit then the mortgage would be whatever the difference is. But be aware that the lender is likely to expect you to have a 10% deposit, and some lenders expect 25%. Also, as someone else has said, their surveyor may place a lower value on the property.

angel_nicx

Thanks guys. Mum had it valued at £80,000 and is willing to let us purchase it for £76,000.

somethingcorporate

angel_nicx wrote: »

Thanks guys. Mum had it valued at £80,000 and is willing to let us purchase it for £76,000.

You will still need a 10% deposit.

_Andy_

somethingcorporate wrote: »

You will still need a 10% deposit.

Yep plus fees etc.

herbiesjp

A concessionary sale is definitely possible.

However the gifted deposit would need to be at least 10%.

Then, as stated above, you need to cover all other costs i.e. solicitors to name but one.

angel_nicx

We were told that the difference would count as the deposit.

For example if the house was valued at £80,000 and we agreed with Mum to purchase it for £70,000, then the £10k would be seen as a deposit by the lender.

Or are London and Country telling me fibs?

zzzLazyDaisy

I think you may have misunderstood.

If the property is valued at £80k, and your mum agrees to accept £70k then the £10 difference is viewed as a gifted deposit from your mum - but the purchase price will still be £80k (ie the difference between the mortgage and the purchase price = the deposit)

Although earlier you said

angel_nicx wrote: »

Thanks guys. Mum had it valued at £80,000 and is willing to let us purchase it for £76,000.

Which is not a 10% deposit.

angel_nicx

zzzLazyDaisy wrote: »

I think you may have misunderstood.

If the property is valued at £80k, and your mum agrees to accept £70k then the £10 difference is viewed as a gifted deposit from your mum - but the purchase price will still be £80k (ie the difference between the mortgage and the purchase price = the deposit)

Although earlier you said



Which is not a 10% deposit.

We're going to talk to her about the difference in price, just using the £70k as an example really. I realise we would have a mortgage of £80k to repay. Any ideas which mortgage lenders deal with these kind of purchases?

As always - thanks!!