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Buying a family member's house
Seraphim
Posts: 246 Forumite
One of the member's of my family is in a bit of a bind and wants to sell their house. The house is in need of a bit of TLC. We have come to a provisional figure between us which is under market value for the property. If I buy the property for under market value, is there anything I need to be aware of from a legal or tax point of view? How does CGT work? (I have a house already so this would be a second house).
I think I would need a mortgage. If I bought the house, I would require a mortgage for about 45% of the house value. Does it matter to the mortgage company if the house value is not what I paid? Or would the mortgage company look at the LTV of the amount I paid for the house?
I think I would need a mortgage. If I bought the house, I would require a mortgage for about 45% of the house value. Does it matter to the mortgage company if the house value is not what I paid? Or would the mortgage company look at the LTV of the amount I paid for the house?
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Comments
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how much under the market value are you paying .
How Quickly could they sell it on the open market .
The mortgage company would look at the LTV and the affordability of the mortgage .CGT will only be a problem when /if you sell."Do not regret growing older, it's a privilege denied to many"0 -
I would be paying 15% under what I think it would achieve on the open market. Because of the location and the TLC required, I think it would take a few months to shift and he'd like it sold sooner rather than later. Plus he'd prefer for the house to stay in the family.
With the LTV, would the mortgage company take the value I paid or the actual value of the house? It obviously would make quite a big difference to the actual LTV depending on which figure they use!0 -
Usually the V in LTV is the lower of 'the price you pay' and the 'surveyor's valuation'.
Some lenders will take into account a "concessionary purchase" between close relatives. So, if Mum sells her £200k house to her son for £100k, some lenders will still count the house as being worth £200k. But not all lenders, and not for all family relationships.
Plus, from a lender's perspective the true value of a property might be what they'd get if they repossessed it and had to sell it quickly. So, the lender might think your 15% discount isn't really a discount at all, given the house needs TLC.0 -
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Error.Credit Card £4350 @ 0% until October 20150 -
Where's the family member going to live once you've bought the house? Will they continue living in the property or use the money from the sale to buy/rent elsewhere?0
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