Buying house from family member

Little_Missy

Hi all,

I plan to buy my first home from a family member.

The scenario is:

- Family member has unoccupied property, which requires extensive renovations

- Family member no longer wants the property and so plans to sell it

- I would like to purchase the property. I have sufficient earnings, but do not have a deposit

- Family member has offered to gift me the deposit by way of equity in the property (i.e. property is valued - sale price is agreed at value - family member only receives money from mortgage - I do not part with any money)

- Family member has no further interest in property

Does anybody know if the above is possible? If so, which lenders would accept the above scenario?

Thanks in advance!

kingstreet

Yes, it's possible, but the "extensive renovations" might be an issue with the valuation if the surveyor things the property is unmortgageable in its present condition.

holly_hobby

Yep, as Kings states this is completely permissible with several lenders, and is typically referred to as Family Discounted Purchase.

The mge LTV is based on the property market valuation (value confirmed by the surveyor on survey), to the actual amount of mge you require .....

ie property valued on survey at 100k, you want to borrow 75k = 75% LTV, with the 25k difference essentially acting as the deposit for the lenders figs and uw purposes.

I would recommend a broker to assist, as not all lenders will base their calcs on the market valuation as noted above, but will use the actual pch price itself as the starting point .... so it would be wise to cut the chase in only considering those whom accept the deposit originating from a Family Discounted Purchase arrangement.

When you say extensive renovations, do you mean it is structually sound, has a functioning bathroom and kitchen, but the decor and styling is stuck in 1972 ? Or are things a tad more complicated ?

If its anything more than a lick of paint and and general updating, you may find that there is a retention for any essential works, which would include things such as structual/roof/damp issues, partial or full re-wire (if the elecs haven't been renewed for a couple of decades and don't meet current safety standards on examination), and/or if you don't have a functioning bathroom/kitchen - which are classed as basic utilities and an abosoulte necessity for securing a mge - which means if it doesn't have them it'll be a 100% rentention until they are installed/made functioning.

Anyhoo, lets not jump ahead, if you give us a few details about the property and purchase, we'll try and guide you accordingly.

Hope this helps

Holly

ValHaller

holly_hobby wrote: »

partial or full re-wire (if the elecs haven't been renewed for a couple of decades and don't meet current safety standards on examination)

Electrics only have to meet safety standards applicable at the time of installation. The only reason for a rewire would be if the physical condition was poor.

holly_hobby

Yes, talking about the surveyor asking for an elecs report, and that coming back with issues - such as overloaded consumer boxes, outdated, dangerous or old 2 core wiring, etc ....

A safety examination (ie NICEIC, etc) cert will of course be reqd for any electrical works that are completed as a requirement of the mge offer - either by the installer themselves, or by independent examination post completion of works (although many practioners perfer not to certifiy someone else's work).

Anyhoo, hope that clarifies what I meant ...

Holly