buying parents house under market value

dazzl

Hi,

Im looking to buy my parents at roughly 40% market value, however I cannot find any options online on the major mortgage lenders websites,

Is this something I would have to make an appointment to discuss?
Does a low LTV mortgage increase your chances of obtaining it?

thanks

Mojisola

Do your parents understand the 'deprivation of assets' rules and how they may be affected in the future?

dazzl

We are aware of it. but this is all still very hypothetical. if you can help it would be appreciated.

Mojisola

Can't help with the mortgage but others will be along who will be able to.

Thrugelmir

Meeting the lenders criteria for the amount that needs to be borrowed is the first hurdle. The property is secondary.

Where will your parents reside after the sale?

theartfullodger

HMRC will likely spot this odd sale value & tax you (both stamp duty & eventually CGT or IHT..) on the market value:

I'm sure we'd all agree we don;'t want tax cheats any more than we want benefit cheats in your fair country...

Probably worth a call to HMRC to check their views.. you don't want them chasing you later assuming a fiddle...

Cheers!

dazzl

Thrugelmir wrote: »

Meeting the lenders criteria for the amount that needs to be borrowed is the first hurdle. The property is secondary.

Where will your parents reside after the sale?

they will be staying in the house with my family.

theartfullodger

This would be so much cleaner & easier if you simply buy at genuine market value: If parents then want to gift you £x00k then fine, do that.

If you live there then parents can't claim some benefits (eg housing benefit).

dacouch

Why do your parents not just gift the house to you?

Nobbie1967

dazzl wrote: »

they will be staying in the house with my family.

I think this will be an issue for lenders and you'll need to speak with a broker or direct with the lender. Stamp duty is usually only payable on the money that changes hands, but in this case their is a linked transaction of your parents living rent free. HMRC would also view the 60% discount as a gift with reservation and so it would remain in their estate for IHT purposes. Basically it's not at all straightforward and you'll need legal advice rather than picking up knowledge from the internet.

dazzl

theartfullodger wrote: »

This would be so much cleaner & easier if you simply buy at genuine market value: If parents then want to gift you £x00k then fine, do that.

If you live there then parents can't claim some benefits (eg housing benefit).

I wont be able to get a mortgage at full market value, but that is a good idea. as for why we want to do it, it is to clear their existing mortgage. it is starting to sound alot more difficult than I first thought.