Mortgage for less than value but more than purchase price

mrginge

Foxy-Stoat wrote: »

You should buy the house for £90,000 and take out a mortgage accordingly, then your vendors can just give you £30,000 in cash back for you to decorate and upgrade the house for you.

Done and done !

Wow, is it really that easy?

Foxy-Stoat_3

Why not, the vendors get their £60k and the OP gets £30k in cash to do up the house with.

Personally I can't see anyone giving away 30% on their property.

Brighty

Foxy could be on to something if you can scrape a 10k deposit together
Set purchase price at £100k
Apply for 90% £90k mortgage, you'd need a £10k deposit
Mortgage company will value property and you'll find out if the place they only want £60k for is really worth £100k, which might not be the case.
Once sale has gone through, your friends give you £30k of the £90k back as a gift, nothing to do with the house purchase.
Nothing fraudulent there is there? Only issue is that once they have £90k in the bank, are they really going to just hand over £30k to you? Doesn't sound like they are that loaded if this property is/was their 'home' as you put it, unless they are recent lottery winners.

Brighty

Monday123

This last suggestion might not be viable if your friends are liable for CGT - which sounds like they might be, if they're renting out the property to you. If they "sell" it to you for 100k then they will be liable for more CGT than if they were to sell it for the real price, ie 60k.

LucidlyKataklys

Monday123 wrote: »

This last suggestion might not be viable if your friends are liable for CGT - which sounds like they might be, if they're renting out the property to you. If they "sell" it to you for 100k then they will be liable for more CGT than if they were to sell it for the real price, ie 60k.

Think wires might have gotten crossed here. They aren't currently renting the property out to anyone. We are living in our own rented place, they are living in their current house(The one we are looking to purchase) whilst they are doing up their new house.

So not sure if that would still apply?

I'm going to have some informal chats with banks/brokers within the next week, as it seems to be something of a grey area.

As mentioned earlier in the thread(Can't remember who said?) but might discuss the vendor deposit idea with them too.
We can afford the deposit if needed, but obviously having a higher deposit is always better.

Btw, if people are interested as to the responses I get from brokers/banks, let me know and I'll report back.

Monday123

LucidlyKataklys wrote: »

Think wires might have gotten crossed here. They aren't currently renting the property out to anyone. We are living in our own rented place, they are living in their current house(The one we are looking to purchase) whilst they are doing up their new house.

Ah forget what I said, then. CGT wouldn't apply.