Mortgage & Deposit information

Cthrower

Hi guys,

I've got a quick question to ask regarding mortgages.
My partner and I are in a position to purchase a house from a family member at a significantly reduced price.

Unfortunately, we don't have enough savings to put up a deposit. However, The house is valued at £156k - We can purchase it for £100k - Would we still need a 5-10%+ deposit, or would the mortgage company have the extra £56k as a security blanket. i.e. If, which won't happen, they have to repossess they'll make their "deposit" money from that extra value?

Thanks in advance.

kingstreet

No. This is a concessionary purchase, or purchase at undervalue from a family member and the reduction in the price becomes your deposit.

Take care, as some lenders will treat the net price as no less than 80% of the value, so you won't get a 60% loan to value product from one of them.

Building_Surveyor

And also it's the mortgage valuation that counts, not what someone's told you it's worth.

Cthrower

Building_Surveyor wrote: »

And also it's the mortgage valuation that counts, not what someone's told you it's worth.

Ofcourse, I understand that. However, the value won't be much different than, it was valued by an estate agent rather than just what someone has told me it's worth.
It's a 4 bedroom detached, in a very nice area.

Smaller, semi-detached homes on the same road are valued at around £130k (Atleast, that's what they pop up on Rightmove for).

Thanks for your info too, Kingstreet.
I was just curious as to whether it was worth visiting a mortgage adviser yet, or whether I'd need to spend a year saving £10k before doing that.

Yorkie1

An EA's 'valuation' is likely to be higher than the actual value as they always build in an excess to enable negotiation down by the buyer.

Have a look on nethouseprices.com or zoopla etc for sold prices of similar properties in the same street / neighbourhood in the last 6 months or so.

Lavendyr

Cthrower wrote: »

it was valued by an estate agent rather than just what someone has told me it's worth.

Lol. Sorry. EAs will always come out on the higher end and will be giving an asking price rather than a selling price. Look at what other houses have sold for recently on mouseprice or something to get a better idea of the true value.

Cthrower wrote: »

I was just curious as to whether it was worth visiting a mortgage adviser yet, or whether I'd need to spend a year saving £10k before doing that.

You almost certainly won't get a mortgage without a deposit. However, if the house is worth more than £100k - and assuming your parents have liquid assets, of course - why not consider getting your parents to gift (not loan, gift outright) you some cash for a deposit (say £11k) and then buy the house for £110k instead?

kingstreet

Lavendyr wrote: »

You almost certainly won't get a mortgage without a deposit. However, if the house is worth more than £100k - and assuming your parents have liquid assets, of course - why not consider getting your parents to gift (not loan, gift outright) you some cash for a deposit (say £11k) and then buy the house for £110k instead?

Why do they have to gift cash?

They are gifting the equity.

Cthrower

Lavendyr wrote: »

Lol. Sorry. EAs will always come out on the higher end and will be giving an asking price rather than a selling price. Look at what other houses have sold for recently on mouseprice or something to get a better idea of the true value.

Appreciate the point about estate agents, however, I can't imagine they'd overvalue the property by £50k+
Smaller, semi-detached homes on the same road, according to Zoopla, sell for between £120-£140k

The only other 2 detached in the same road, and with 1 less bedroom (As this properties been extended) sold for £180k in 2007 and the other for £162k in 2007.
Never heard of Mouseprice before. I've just checked that and this is the results;
Valuation estimate: £177,500
Value range: £158,000 to £197,000

My thoughts were similar to kingstreet's regarding using the equity as the deposit.

Building_Surveyor

Cthrower wrote: »

Appreciate the point about estate agents, however, I can't imagine they'd overvalue the property by £50k+

.

You'd be surprised!

Cthrower

Building_Surveyor wrote: »

You'd be surprised!

Probably not in this case though, as I say, the values given to this house and similar houses (Sold prices too) on the same road are quite a bit more.

Granted this house does need a little work, but nothing major. I could imagine the price fluctuating a little, but not by £50k.

Lavendyr

kingstreet wrote: »

Why do they have to gift cash?

They are gifting the equity.

If that's acceptable as a 'deposit' from the perspective of a lender then fair enough. I didn't realise it would be.