dream house - can't understand why we can't get it? please help

janetmcc1

Hi there, I am looking for a little help from someone in the know regarding buying property.

I have found the house I want to spend long-term future in but I can't understand new rules which mean I can't afford it. The house is valued at £295000 and I have verbally agreed with the seller to pay £250k for the house with £20k cash to avoid stamp duty. I thought taking into consideration the value of the house and if I was able to put down a 10% deposit making my mortgage amount £225 this would mean ltv rate 75% ish. However I have just been advised it puts me in the 90% ltv rates as I am only putting down a 10% deposit. When you are buying a new home are lenders not taking into consideration ltv anymore?

I am planning letting out my current home to a family member, only £100k left on mortgage and my partners annual salary (85K per annum) should, hopefully, be suffice.

Can anyone explain this further and help what I should do to get the house.

At present I would struggle to afford 25k (deposit), 20k (to owners cash), 1% stamp, lawyers fees. Any advise really would be truly welcomed.

thanks

Jane

mildred1978

Ltv is calculated on the lower of the valuation or purchase price. You are purchasing for £250k so that's what it's based on. You Can't tell the mortgage co it's worth £295k and the tax man it's worth £250k!

mildred1978

Oh, and you'll need a buy to let mortgage to rent out your existing home.

googler

janetmcc1 wrote: »

The house is valued at £295000 and I have verbally agreed with the seller to pay £250k for the house with £20k cash to avoid stamp duty.

I stopped reading here. Do you REALLY want to publicly admit to proposed tax fraud?

janetmcc1

I certainly won't then be doing the £20k cash then as I'm not committing fraud for the sake of a few thousand. Thanks for that.

Is there any lender who will allow you to make the 10% deposit but take into account the valuation figure and not the figure you bought at?

Yorkie1

The first comment is that

I have verbally agreed with the seller to pay £250k for the house with £20k cash to avoid stamp duty

is fraud. A criminal offence for both you and the seller.

You will not get a solicitor to condone this as their professional livelihood is on the line and they should report you for fraud.

Therefore, even if you decided to go ahead with the fraud, you cannot tell the EA (because you're defrauding him out of fees for the sale of the full value), solicitor, or lender (because they'll put you on the blacklist quicker than you can say jack rabbit).

It follows that for all purposes you will have to (fraudulently) declare the sale price as £250K. Of which, £225K is 90%.

In any event, your figures don't add up. Where do you get the 75% figure from? 75% of £250K is £187500. 75% of £270K is just over £200K. Neither of which take you up to either sale price with a legal deposit of £25K.

Your plan is seriously flawed on so many levels ...

Finally, you mention a new house. If you mean a new build, you should be aware that lenders routinely value them at a lower value to take account of depreciation.

Edit: just seen your post above. Good for not proceeding with the fraud aspect.

As another poster has already said, the 10% is worked out on the lower of the sale price and the lender's valuation of the property.

So, if you agreed to buy at £270K, but the valuation survey said it was only worth £240K, the lender would only lend you 90% of £240K, leaving you to find the balance between that and the purchase price, or else to try to renegotiate the purchase price down to the lender's valuation. There aren't any lenders that do it any differently.

matthorp

A house is worth what somebody pays for it, not what asking price an agent puts on it. If you are paying 270, then this is the only figure that any lender will look at.

mildred1978

Yorkie1 wrote: »

In any event, your figures don't add up. Where do you get the 75% figure from? 75% of £250K is £187500. 75% of £270K is just over £200K. Neither of which take you up to either sale price with a legal deposit of £25K.

.

She's using the £225k mortgage and £295k valuation.

pleasedelete

The house is 270k. You have a 45k deposit. Is that right?

So 17 percent ish? Deposit

matthorp

Yorkie, I think the 75% figure came from 225K mortgage against a 295K asking price.

ETA Please ignore, somebody else types quicker than me!

janetmcc1

The suggestion of the £20k was made by the people selling the house as they suggested many ways to allow me to afford it. Now the point has made I certainly wont be going down that route. To be honest I hadn't even thought about that side of it, having not been in the property circle for many years I simply went along with their idea. Now I see the points raised I wont be doing that for anyone. thanks. By the looks of it I wont be able to afford it but thanks for pointing that out before a big mistake was made!!!