Is your house worth 260-310? Would you pay 2% stamp?

silk_2

Hi there

I just want to run a quick.. "poll" I guess to see what the sellers think of this.

My partner and I wish to buy a house, and we can get a mortgage of up to 340k - but really we're looking more at 240-300 just to feel extra comfortable with interest rates and all that.

Of course, the nicer homes which suit our needs more are always over 250 and therefore we get the dreaded 3% SDLT.

The biggest problem we then have is that we'd suddenly need over 10k upfront for fees. To afford that comfortably, I'd have to save up for another 6 months, which is just more dead money on rent.

So I am curious.. as a seller, would you ever consider paying say, 2% of the 3% stamp? If it meant you could move your house at a price close to what you wanted?

I'm just putting it out there before I make myself stupid asking the Estate agent / sellers these kinds of questions.

For example, saw a beautiful home that was on for 299. Would gladly offer 295 if they'd pay all or some of the stamp but am feeling cautious about making a fool of myself..

I had one EA tell me "why not just take it off your offer" but that isn't the same, the problem is that it's an upfront cost.

notanewuser

Yes I would.

Mrs_Z

Hmmm.. my initial reaction would be 'no, I would not'. My view would be that if the buyer can't afford the stamp duty - then tough, they can't afford to buy. However, there are of course circumstances and if I was under pressure to sell quickly - then I think i'd have to consider my position very carefully.

martinsurrey

While the seller might to it, your mortgage company would not be impressed, and would not allow it, as you are asking them to pay for the stamp duty.

As an example, assume a 90% ltv mortgage

House £295k with vendor paying stamp duty of £8,850.

Mortgage amount of £265.5k

House £285k with buyer paying stamp (so same net cash for seller just about)

Mortgage amount £256.5

So in the former, the mortgage company is in effect paying the £9k of stamp duty.

What would happen is that the mortgage company would only offer based on the net selling price of the house, which in both the above cases is £285k, so the max 90% mortgage is £256.5k meaning you have to find the stamp duty regardless of how the deal is packaged.

Edit to add,

dont confuse new builds, where these kind of deals are allowed by the mortgage company

silk_2

martinsurrey wrote: »

While the seller might to it, your mortgage company would not be impressed, and would not allow it, as you are asking them to pay for the stamp duty.

As an example, assume a 90% ltv mortgage

House £295k with vendor paying stamp duty of £8,850.

Mortgage amount of £265.5k

House £285k with buyer paying stamp (so same net cash for seller just about)

Mortgage amount £256.5

So in the former, the mortgage company is in effect paying the £9k of stamp duty.

What would happen is that the mortgage company would only offer based on the net selling price of the house, which in both the above cases is £285k, so the max 90% mortgage is £256.5k meaning you have to find the stamp duty regardless of how the deal is packaged.

Edit to add,

dont confuse new builds, where these kind of deals are allowed by the mortgage company

I don't follow.

Let's keep it simple..

House is valued / on sale at 300k.

10% deposit is down (30k) and I mortgage the remaining 90% (270k).

The seller pays the 9k stamp out of his pocket i.e., once he gets the 300k it comes out of that - effectively meaning he's sold the house at 291k - not far from what he wanted.

The mortgage company doesn't see or care about who has paid the stamp, it does not affect the amount I am loaning.

To put it in clearer terms..

Scenario B

House is valued / on sale at 300k.

10% deposit is down (30k) and I mortgage the remaining 90% (270k).

I also pay 9k to the government for stamp.


...

What's the difference?

I think you've assumed I mean offer more than the house value, which I never suggested at all. The bank will loan the max / market value of the house, and like any buyer I'd try to start by offering less anyway (but not too much less since I want them to pay some stamp as well).

laidbackgjr

The point is in the mortgage approval process, the bank will have checked you had sufficient savings for the £30k deposit and approx £15k for stamp duty and other fees. If you couldn't demonstrate having enough saved including stamp duty you are unlikely to be granted a mortgage, or for instance the bank would insist on a 95% mortgage with £15k deposit and £15k for stamp duty and other fees.

monty-doggy

I am buying at the min and no one has asked proof of stamp duty funds, only deposit.

kmmr

silk wrote: »

I don't follow.

Let's keep it simple..

House is valued / on sale at 300k.

10% deposit is down (30k) and I mortgage the remaining 90% (270k).

The seller pays the 9k stamp out of his pocket i.e., once he gets the 300k it comes out of that - effectively meaning he's sold the house at 291k - not far from what he wanted.

As I understand it, the bank would view the property as being valued at £291. So if you borrow £270k, your LTV rises to 94%, which breaches the mortgage offer.

I don't believe the bank really checks your savings (they never checked mine), they just ask you - and if you lie - technically it's fraud. Most likely you would have to leave your solicitors out of this as they couldn't mislead the bank, so you'd have to ask the vendor to pass the money to you prior to completion and trust you to complete.

silk_2

laidbackgjr wrote: »

The point is in the mortgage approval process, the bank will have checked you had sufficient savings for the £30k deposit and approx £15k for stamp duty and other fees. If you couldn't demonstrate having enough saved including stamp duty you are unlikely to be granted a mortgage, or for instance the bank would insist on a 95% mortgage with £15k deposit and £15k for stamp duty and other fees.

We can afford it, we can demonstrate this, and we have a MIP.

The fact is we don't want to "spend" 9k on "nothing" when we could instead spend it on a kitchen refurb or landscaping.

As a buyer I'd sooner offer closer to the market value of the house, e.g. 295 for a 299 - and ask for 2% stamp from the seller, vs offering 290 or less and paying full stamp myself.

To be honest house prices around here are going for almost 100% of the asking value anyway - which is why martinsurreys post confused me.. there's no false/inflated pricing going on here, it wouldn't surprise me if we had to offer the full asking value to get the house we wanted.

Hence posing the question.

kmmr

I must admit, I have often thought about this. I own a flat which will be around the £260-275 mark, and I'd happily pay the stamp duty to get the extra £10-25k, but I'm not sure how to approach it.

silk_2

kmmr wrote: »

As I understand it, the bank would view the property as being valued at £291. So if you borrow £270k, your LTV rises to 94%, which breaches the mortgage offer.

I don't believe the bank really checks your savings (they never checked mine), they just ask you - and if you lie - technically it's fraud. Most likely you would have to leave your solicitors out of this as they couldn't mislead the bank, so you'd have to ask the vendor to pass the money to you prior to completion and trust you to complete.

Where'd the 291 come from? The house is valued at 300 and on sale for 300, indeed houses on that street go for more.