Concessionary deposit advice

coachmeth

Hi there

I'm after a little advice if anyone can help.
Myself and my wife are looking to buy a house from my father. However do not have a deposit saved for this.

The apx value is £140k, however my father will sell us the house for £120k.

I believe this can be a concessionary deposit with some lenders.

My question is, does anyone have any general tips and advice?

I thought my options maybe as follows.

Get a mortgage for £120k, with the £20k difference acting as a deposit, apx 80% LTV.

Or

Get a mortgage for £133k, with the £7k difference acting as a deposit, apx 95% LTV.
With my father giving me £13k after the sale, this option allows me to pay off a few debts which would be ideal, but not essential.

Is that how it works?

Thanks in advance.

Mark

chrisjdw

Evening Mark,
Concessionary mortgages are a very tricky form of lending. In theory that is completely right, couple of things to note, not all lenders will accomodate for concessionary mortgages.
Nearly all of them will require your father to move out by completion much like a normal purchase.
Some will also require a 5% deposit from you anyway.
I would highly suggest seeking out independent mortgage advice around this as it is not very common and not always available.

amnblog

As Chris says Mark, this is far from straightforward.

A key factor is where your father lives or intends to live.

A number of lenders will consider this type of situation, but there are a few complications that can eliminate certain lenders at outset.

You need to use the right Lender for you and that means engaging an independent mortgage broker.

coachmeth

Thanks for the advice.

A little further info if this helps.

Myself and my wife currently live in the property in question.
I then rent a bungalow that my father and step mother live in.
So basically he pays mortgage where I live and I pay rent where he leaves.

We have been here about 12 months. The reason for this set up is my father wanted to move somewhere smaller and the house wasn't selling. We lived in a smaller flat and wanted somewhere bigger.
The plan was to put the house back on the market later, but we have now decided to purchase it and the lower rate was the sweetener.

To add to this we also have another option, this is for my father to pay our deposit of apx £6500, on a £126k mortgage.
Basically my father would loan us the money for the deposit, which he'd get back in the sale price. Still under the technical value of the house.

This option may give us more options with lenders so might be a better way to go.

Either way I likely need to talk to a broker who knows more and go from there.
But if anyone has advice or comments I'm very happy to hear them.

Thanks as always.

marksoton

coachmeth wrote: »

Thanks for the advice.

A little further info if this helps.

Myself and my wife currently live in the property in question.
I then rent a bungalow that my father and step mother live in.
So basically he pays mortgage where I live and I pay rent where he leaves.

We have been here about 12 months. The reason for this set up is my father wanted to move somewhere smaller and the house wasn't selling. We lived in a smaller flat and wanted somewhere bigger.
The plan was to put the house back on the market later, but we have now decided to purchase it and the lower rate was the sweetener.

To add to this we also have another option, this is for my father to pay our deposit of apx £6500, on a £126k mortgage.
Basically my father would loan us the money for the deposit, which he'd get back in the sale price. Still under the technical value of the house.

This option may give us more options with lenders so might be a better way to go.

Either way I likely need to talk to a broker who knows more and go from there.
But if anyone has advice or comments I'm very happy to hear them.

Thanks as always.

With all due respect that sounds like a bit of a mess, especially as your father is probably in breach of his Mortgage agreement and you are effectively sub letting to him currently.

coachmeth

marksoton wrote: »

With all due respect that sounds like a bit of a mess, especially as your father is probably in breach of his Mortgage agreement and you are effectively sub letting to him currently.

Totally understand it's just the current situation, hence trying to arrange the house sale now.