Mortgage affordability question!

holly_hobby

Yes, you are looking for a family discounted pch arrangement - lots of lenders accept this, but its only for immediate family (which Grandad obv meets).

The mge application is completed with the pch price as the market value (ie 330k) with the mge reqd equivilient to the agreed sale price (220k) - the 110k difference effectively acting as the deposit.

Obv your income (net of commitments) will need to be sufficient to svc the mge reqd of 220k, but at 66% LTV, they may well be a home for this, if everything else stacks up.

SDLT wise, you'll pay it on the actual consideration, which is 220k (rather than the mkt value of 330k).

HOWEVER ... it should be noted that as the property ceased to be Grandads primary residence in excess of 36 mths ago (you say 4 yrs have passed), he is now sadly liable to CGT on the gain under PRR regs, which is be based on the difference between acquisition and market value on disposal (less permitted deductions/reliefs).

Baring that in mind, he want to rethink selling the property, and instead bequeathing it instead - unless you grandchildren are happy to effectively meet the CGT liability in exhcange for your early inheritance ?

It should also be noted that this exercise is effectively a PET under IHT regs - which will only become exempt if Granddad surives for 7 yrs post the donation to each of you, and relevant if his net estate (inc non-exempt gifts) exceeds nil rate IHT band (currently 325K or upto 650k if there is any unused deceased spousal nil rate band available for tsf request to HMRC by his executors on his death). Of which provision may be made by your IFA with particular insurance policies.

Perhaps a re-think and discussion re estate and tax planning is reqd before you dive into anything here ?

Hope this helps

Holly