Allowance on completion - does anyone know anything about this???

justinquick

hello

me and my wife are looking to but a new property, we went into a barclays for mortgage advice and was told about allowance on completion

this is basically a way to save on deposit.

how it is meant to work is that if i buy privately with seller and we agree on a price of the property for this save lets say £200,000. i ask the seller if he will agree to accepting all the money on completion, if he says yes, my lawyer and his lawyer draw up the papers saying that he has agreed to sell it to me at £200,000.

i then go to the bank and say that i have 10% deposit and the seller is selling me the house for £220,000.

the bank lend me the 90% which is £200,000 which they pay to the sellers account. meaning they pay the full mortgage us, meaning i save on the deposit there by using my deposit to do my house up

now for this to work, both lawyers have to agree to this

my question is is this true, and does this work and does it exist?

i have trouble with this because if this was the case would everybody not be doing this now?

please help me out people with you knowledge

cheers

jockosjungle

A Barclays MA told you this? Sounds like fraud to me which you need two lawyers and a bank to join in with

justinquick

yeah a mortgage advisor....he basically said that this what they (mortgage advisor) use to do in the early 90s when intreats was very high.

CloudCuckooLand

http://www.lawsociety.org.uk/productsandservices/practicenotes/mortgagefraud/2607.article

Warning signs

The mortgage is for the full property value. While this is less likely in tighter credit conditions, you should consider it in light of the other warning signs.


http://www.guardian.co.uk/business/2009/aug/30/mortgage-fraud-increase
How a mortgage scam works


In some cases gangs would buy a property, typically in a large development, at a deliberately inflated price.

Yorkie1

Definitely fraud and I'd be wanting to report any mortgage advisor who was encouraging me to commit a criminal offence.

zzzLazyDaisy

And there is another problem - when the surveyor values the property for the mortgage, the chances are high that he will not value the property at less than the over inflated valuation you have agreed with the seller - in fact it is more likely that the valuation will come in under the real purchase price.

Unless you are suggesting that the surveyor is also bent????