using equity as a deposit?

sumaskye

hi there. i'm sure I have read somewhere that if you're buying a property below market value you can use the equity in it as the deposit. is this right? cheers, jay

GMS

Only if it is a Right to Buy or inter family purchase.

ACG

It used to be the case but for the average purchase now a days it cant be done unless like GMS says its from a close relative or RTB.

sumaskye

it would be me selling my house to my daughter and son in law for less than market value as they don't have a deposit. given that it's close family, where and how would I go about doing that? cheers, jay

GMS

Where are you intending to live after they buy it?

You could ask different lenders or use a broker to do the legwork.

sumaskye

I am planning on going travelling. nor can I afford the mortgage any more. it would give them a head start and help me out too. are such mortgages easy to find from lenders? would a broker be easier? cheers, jay

holly_hobby

Any decent broker, after assessing your child/partners financial situ, will determine which lenders criteria they fit, and whom also permit a discounted family pch ie - utilising the difference between market value and actual pch price as the deposit (assuming property values up on survey etc)

SDLT wise, it will be based on the actual purchase price (ie what your child purchases from you for).

You will not be permitted to remain resident post completion.

This is not permitted if you are in the process (or due to go through), a banktruptcy order and will affect any means tested benefits you may later seek (under deprivation of assets).

You must fully redeem your own mge and all secured debts on completion (failure to do so because of lack of funds means that any chargees may refuse to release their charge, making you forced to sell at market value, or find funds to settle the os liabilities for elsewhere).

As I say a decent broker will make light work of this (assuming there are no credit/affordability issues for children or the above doesn't apply to you).

Hope this helps

Holly

witchy1066

we sold our house to my son, it was an easy process and no complications , went through same as any other sale but we did have to have different solicitors, which I was happy about , and I think its a good idea , emotions can blur things sometimes when its family,

good luck with the sale and traveling , its the best thing we ever did