Buying House under market value and mortgages!

Mathew

Hi,

A family member has offered to sell me thier house for less that what it's worth. I realise that LTV is initially worked out on sale price and my mortgage would reflect that.

However, my question is, if I was to remortgage in a year could I use the equity in the house to get a better LTV and subsequent mortgage?

kingstreet

Possibly. Just one question though.

What happens if the lender does a desktop valuation and it doesn't recognise you bought it cheap, or the surveyor can't find any comparables and yours is the only sale in the last couple of years?

beecher2

How close is the family member as a gifted deposit might be possible if they're a parent.

Mathew

Thanks,

I understood that if a lender undervalued you could appeal it. I would be quite hopeful that it would be valued to what I expect. It was on the market for a month before she (mum) made me the offer. It was on at the lowest of what three estate agents suggested (they were within 10K of one another) and I've agreed a price 25% lower than that.

It's my mum. Do you think that would be the best option?

beecher2

I'd go to see a mortgage adviser and get them to talk you through gifted deposit options but it sounds like your LTV should be pretty good without having to remortgage in a year.

CloudCuckooLand

Gifted deposit is possible.

Be aware that Mum giving away equity has potential implications for IHT, Pension credit, Council care, deprivation of assets rules, etc...

Mathew

I saw one hoping that the true value of the house would be reflected in the mortgage offer. But they explained that it is based on sale purchase. I have 10% of sale price and can get a mortgage, but hoped in a year I could remortgage with a much better LTV.

From your responses it seems to be possible.

kingstreet

Removed daft irrelevant post!

Tesla

I am in a similar position to the OP and am currently enlightening myself to the world of mortgages and home ownership.

I have been unable to find any products with a 1 year term, taking a longer term and taking the hit on charges is an option but unlikely to be worthwhile so I am now making a 2 year plan.

I have never heard of a gifted deposit so will research into that now.

liubeliu

Mathew wrote: »

I saw one hoping that the true value of the house would be reflected in the mortgage offer. But they explained that it is based on sale purchase. I have 10% of sale price and can get a mortgage, but hoped in a year I could remortgage with a much better LTV.

From your responses it seems to be possible.

In a years time the valuer will use the price you paid as a comparable and therefore are unlikely to see a net increase in property value and therefore no increase in equity and therefore no reduction in LTV without a cash injection.

beecher2

Mathew wrote: »

I saw one hoping that the true value of the house would be reflected in the mortgage offer. But they explained that it is based on sale purchase. I have 10% of sale price and can get a mortgage, but hoped in a year I could remortgage with a much better LTV.

From your responses it seems to be possible.

Did you explain to your mortgage advisor that you were buying from your mum? Unless you made this clear they wouldn't think to talk to you about gifted deposits.