Deposits re sold below value

stevrich

Hello everyone - long time lurker, first time asking...

I currently have a mortgage for my flat which is a shared equity property 80/20 however I have the opportunity to purchase a house owned by the family and I am not quite sure how getting a mortgage for it would work. I would have to sell my flat first which may prove problematic due to it being a shared equity (the scheme where the Scottish Gov holds a stake to help 1st time buyer etc).

Anyway the terms of sale would be that the house would be sold to me at way below market value. Say the house gets values at £140k then I would be offered the house for something like £100k. A few people have told me different things regarding the need for a deposit. Some seem to think the lender would just throw the money at me as they would see it as a safe bet due to the equity that would be in the property and would class the remaining £40k as the actual deposit.

Does anyone have any thoughts on this??

Any input greatly appreciated

Steve

kingstreet

The sale of the flat is "normal" you simply repay the equity loan from the proceeds, same as any other secured loan. You may however, have to repay the percentage of the current value you originally borrowed, ie 15% or 20%.

If you wish to purchase a property from a family member at undervalue, the difference between value and purchase price can be sued as your deposit. You will need to ensure you use a lender willing to accept such a transaction. Some do, some don't.

stevrich

Thanks kingstreet.

I have owned the flat for a little over a year and the Government will not remove interest in property for a minimum of 5 years meaning whoever buys the flat buys the 80% and has to take on the debt of 20% and promise to either sell and move before 2022 taking 80% of sale price or buy remaining 20%

Steve