FTB Buying House from family member

gallaghb

Hi there,

I wonder if someone can help me as I currently rent and have not had a mortgage before so not to sure on the ins and outs.
Myself and girlfriend currently rent a house from her father. He owns a few houses and would like to sell the one we rent to us soon. He doesn't have much mortgage on it, the house we think is worth about £400k, he would be happy to sell to us for say £250k. Problem is we don't have much deposit at the moment but someone said to me that we do not need a deposit as we are only borrowing £250k against a house worth about £400k. So the ltv amount works out at about 62%, therefore the rest is effectiely our deposit. Is this correct? It sounds logical, but really not sure how these things work!

Many thanks for your help

GMS

Some lenders will be ok with this as a sale at undervalue' with the equity being gifted by your father in law.

Speak to a broker to see how to proceed.

gallaghb

Thanks for the reply. I'll seek further advice.

Thrugelmir

The HMRC would also view the transaction as tax avoidance. So would base the value for CGT at market value not sale price.

This may reduce the attraction of the transaction to your FIL.

gallaghb

Yep but whatever he does it will be subject to CGT as he only paid £150k for it years ago.

BezzyK

We have just done the same sort of thing with no problems.

Parents brought house 3 years ago, very run down, me and OH moved in and have renovated the house. We are now in the process of buying the house from them. As we have very littel savings as everything was spent on the house, our deposit is in the house as we are buying from them for the same price that they paid 3 years ago.

We have our mortgage from halifax although i think they may have stopped doing the gifted deposit now.