FTB's looking to buy rented house

winmaf5

We have lived in our current rented house nearly a year and have spoken with our landlord about the possibility of buying it. They are happy for us to do so when we have our full deposit together. In the meantime, friends of ours mentioned a 'concessionary purchase' but didnt know too much about it. Would this be something we could go for? I cant find much on the web relevant to this.

Thankyou in advance.

Leon_W

Yes. Some lenders will allow a landlord to gift the deposit for the property to the tenants by way of a 'concessionary purchase' . This means that you don't have to find the deposit.


Speak to a broker who should know how this works. Be aware that not all lenders will allow this.

winmaf5

I see, thankyou for your reply. We have been recommended a whole of market broker so will book an appointment. We were in the process of saving a 5% deposit and use the help to buy scheme but if we could look at the concessionary purchase that would be brilliant. Apologies if this is a daft question but would our landlord gift a say 10% deposit and we get a mortgage for the rest? How does it work?

Leon_W

The landlord gives you a discount on the open market price of the property. So if the landlord gives you say a 15% discount then you need to arrange a mortgage for 85% of the purchase price. The deposit is given to you in the form of equity

kingstreet

Has the landlord given you any indication they are going to sell you the property below market value?

HappyMJ

winmaf5 wrote: »

Apologies if this is a daft question but would our landlord gift a say 10% deposit and we get a mortgage for the rest? How does it work?

Probably not...10% is a lot to lose. They might give you a couple of percent discount on the open market value as agency fees are not involved in the sale. You would have to make an offer.

Make sure you do your calculations. Low deposit mortgages aren't exactly cheap and it will probably be cheaper just continuing to rent it. You also need to factor in the cost of insuring and maintaining it which the landlord is responsible for.

winmaf5

Thankyou all for your replies.

Kingstreet, I see what your saying, they certainly haven't said they will sell below market value to the extent needed for a concessionary purchase. They would like a quick sale so they can push forward with the extension to their family home but there's a difference between this & the discount needed for this type of mortgage. I didn't know much about this type so thought I'd ask here.

I think we are going to continue with our existing plan of saving the deposit ourselves. I was thinking about selling my car to increase our deposit, this would give us £5000 towards it. Would a lender be ok with this as a source of part of our deposit or could it cause a problem?