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

Annisele

janetmcc1 wrote: »

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?

No. Unless the circumstances are unusual (eg you are buying from parents and they're effectively gifting you some money), lenders will consider that the price you've paid is the maximum the house could be worth.

If there's a valuation at £295k but you've paid £250k, then the property must be worth £250k - because otherwise the vendor would have sold to somebody else who was prepared to pay more than you.

As others have said, your suggestion of a £20k cash in hand deal is fraudulent and an absolute non-starter.

If you're not in negative equity with your current house, then presumably selling it would bring in £100k plus. Then you've got £45k in cash, and your partner has a salary of £85k - putting all that together it sounds affordable.

globalds

What's the difference in stamp duty for the £20,000 increase ?

janetmcc1

thanks annisele, yes it looks as though selling will have to be the option then.

janetmcc1

I think they said I would save 3%. to be honest though I haven't looked into it and for a few percent I'll pay the extra!!!!

Yorkie1

£250K @ 1% stamp duty is £2500
£270K @ 3% stamp duty is £8100

A difference of £5600.

googler

OP, if you believed that it was OK to buy for £250k plus £20k cash to the seller in order to bring it below the £250k stamp threshold, would you have thought it OK to put £125k on mortgage and pay £145k cash to avoid stamp duty altogether?

pinkteapot

OP - some people pay £250k for a property and then a few thousand for "fixtures and fittings" to avoid the additional stamp duty. HMRC have been cracking down on this in recent years so any extra you pay will have to be justifiable. Paying £5000 for a free-standing AGA, a nearly-new shed and some top quality made to measure curtains would probably look ok. Paying £5000 for a few Carpetright carpets... Not so much.

You may find that the vendors were talking about this sort of deal - not a straight £20k cash back-hander.

If you do end up agreeing to pay a separate amount for fixtures and fittings (it's doubtful you could make a list totalling £20k!) your solicitor will advise on what's acceptable but, as I said, HMRC are looking at these transactions more closely these days.

janetmcc1

thanks pinkteapot, I am unsure what they meant but what you suggest seems more likely as they certainly didn't look or act as if it was something underhand. They are emigrating to Oz and all their possessions inc furniture, accessories are offered. I will reclarify exactly what this £20k entaiils though just to make sure before I go any further.

To be honest I am unsure if we will be going further anyway, like I said earlier it has been many many years since we moved house and I assumed it was still the ltv rate from the valuation of the property. Now it is only from what you pay then affordability due to only 10% deposit looks unlikely.

Thank you to anyone who posted, and for 'googler' I certainly was not looking to publicly declare anything let alone committing fraud I simply wanted help in an unknown area, that which others certainly have helped with.

Yorkie1

If the seller is thinking of the £20K covering the stuff they are leaving behind, be aware that the items are usually valued at second hand prices and not at what the seller paid. As others have said, it's unlikely that there will enough of them and of sufficiently high quality to get anywhere near half the £20K legally.

kingstreet

janetmcc1 wrote: »

I assumed it was still the ltv rate from the valuation of the property. Now it is only from what you pay

In my 27 years in the industry, it's always been "purchase price or valuation, whichever is the lower" as far as the mortgage is concerned.

In the last ten years, the availability of a 5% vendor gifted deposit on second hand properties clouded that slightly but it was limited to 5% and the practice effectively ended in July when Halifax, the final lender to offer such a facility, ceased doing so.