Terming Cash Back after completion properly?

1st_time_buyer_NW

Hello everyone,

Im am about to purchase a house and have found a huge saving per month on the varying amount of deposits with the same lender. I have £15000 as a deposit which would equate too:

£135,000 Agreed Sale Value
£15,000 deposit equals 11.11% Deposit
£120,000 Balance
£779.61 per month at 6.14%

If I tip the deposit over 15% I make a saving of £94 per month with the same balance of 120,000 therefore I would like to buy the house for more, and recieve some back after completion as follows:

£142,000 Sale Value and agree £7000 cash back after completion
£22,000 Deposit equals 15.49% Deposit
£120,000 Balance
£684.26 per month at 4.79%

(Note : the house was advertised at £147,000 thus when valued should pass at £142k based on other houses sold in the loacal area recently)

The total deposit of £22,000 will be gifted by a family member and paid to my solicitor, they will be happy to sign that they will not have any legal title to the property and will not require the money back (15k of it is mine 7k is theres)

After Completion the vendor will pay 7k back to me, the question is how should I term this properly to avoid it being confused as a vendor paid deposit?.... is cash back the wrong term.... should it be towards updating the property?... maybe replacing the run down garage..... or would this twig the bank into holding it back untill renovations are made?

Ive spoken to an advisor at the bank over the phone and they said as long as the house meets the sale valuation and my solicitor registers recieving the deposit in full prior to completion, what happens afterwards wont be there business, Im not sure the lad on the phone knew what he was saying so am weary about going ahead in this way... so the question is ' How should I term the cash back after completion appropriately?'

Cheers

anselld

Call it "mortgage fraud"! do not pass go, do not collect £200.

JQ.

Yep, it's called Fraud and it's a criminal offence. Whilst you "advisor" may be happy to ignore it, your solicitor won't, they will therefore tell the bank and valuer, and the valuer will just deduct the £7,000 from their valuation so you'll be back to where you started.

DVardysShadow

JQ. wrote: »

Yep, it's called Fraud and it's a criminal offence. Whilst you "advisor" may be happy to ignore it, your solicitor won't, they will therefore tell the bank and valuer, and the valuer will just deduct the £7,000 from their valuation so you'll be back to where you started.

The 2 sentences stand in stark contradiction. Either it is FRAUD or it is a simple matter that the lender won't let you do a transaction that way. OP is plainly seeking to do this with all declarations done openly. It only becomes FRAUD if OP seeks to get the 7000 back as used notes in a brown envelope.

kingstreet

TBH I haven't tested this recently.

If the issue is documented in the agent's sales memorandum and is accepted by the vendor, purchaser, both solicitors and mortgage lender and the surveyor values the property on the basis of the agreed contract, it may still be allowable.

Fraud/deception would apply if an attempt was made to deceive any party in the transaction. Correct documentation would obviously negate this possibility, but I'd still have my doubts that the surveyor would accept the increased "gross" value as reasonable today.

Leon_W

It isn't fraud if everything is declared upfront.

However, it stands no chance of being successful as nobody is going to go anywhere near this with a proverbial pole.

handytips

Jury out on this one, i would go down the fraud route. I wouldnt touch this with a bargepole.

anselld

handytips wrote: »

Jury out on this one, i would go down the fraud route. I wouldnt touch this with a bargepole.

Not really. DVS is technically correct in that fraud must have some intent to deceive. But the bottom line is agreed by all ... this is not going to happen as suggested by any honest means.

1st_time_buyer_NW

Thanks for the feed back everyone, so far Ive told the bank and told the solicitor and all seems to be well subject to the valuation meeting the sale value and the deposit being paid in full from my bank acount so Im going to run with it and on the basis of your comments make sure I am declaring upfront the intentions so all is kept above board and legal.

Ive been frustrated by the rate system being driven by percentage of deposit, the house is really cheap at the price ive bargained it down too, in relation to other properties for sale in the local area its well under the average sale value and its condition so fingers crossed its all in the valuation.

The saving over the 3 year period in rate is just to much to miss out on, at the higher rate its simply un affordable.

Meeper

The rate is driven by the amount of risk. A higher LTV means higher risk to the bank as they would stand less of a chance of recovering their money in the event of repossession.

DVardysShadow

1st_time_buyer_NW wrote: »

... Ive been frustrated by the rate system being driven by percentage of deposit, the house is really cheap at the price ive bargained it down too, in relation to other properties for sale in the local area its well under the average sale value and its condition so fingers crossed its all in the valuation.

Every £1 you get off the sale price is £1 off the value.