Solicitors confused over purchase price

TB1987

Hi all,

We have had a letter from our solicitors today who have become confused over something that my parents solicitor has told them.

We are buying a house from my parents so it is a family purchase. The house has been valued at £130,000 and my parents agreed to sell it to us for £103,000. The £27,000 would be our deposit in the form of gifted equity - i.e. no deposit cash changing hands.

My parents solicitor has put the purchase price on the sale contract at £103,000. Our solicitor has become confused with this and said she thought the purchase was £130,000.

Our mortgage offer says the purchase price is £103,000 and property valuation is £130,000 but it makes no mention of the gifted equity. Our solicitor was made fully aware that it is a family purchase with gifted equity.

What should the purchase price be on the selling contract, £130,000 or £103,000?

Thanks all - we have become so confused ourselves over this and the solicitors aren't sure what to do next!!

stator

The purchase price is indeed £103,000. It's a discounted sale.
The solicitor probably got confused if you used the term 'gifted' as they were thinking gifted deposit?

Typhoon2000

Yes if it is a gifted deposit the purchase price is £130k. If it is a discounted sale, then the purchase price is £103k.

TB1987

Thanks both. So it actually looks like it is our solicitor who has got confused. We have made it very clear on our contract and the letter from my parents that the deposit is in the form of equity so we are a bit annoyed at this. They also have a copy of the mortgage offer which states purchase price is £103,000.

More annoyingly, instead of just picking up the phone to ask us this question they have decided to write to the Halifax to ask for a new mortgage offer to be issued. Would the Halifax just take their word for this or will they speak to our broker about it first who could clarify the situation again?

Thanks again

Yorkie1

Are you getting a mortgage for the purchase? If so, how much is mortgage you have applied for?

Thrugelmir

TB1987 wrote: »

More annoyingly, instead of just picking up the phone to ask us this question they have decided to write to the Halifax to ask for a new mortgage offer to be issued.

Your solicitor's are working for the lender not just you. Did you inform the lender of the full facts when making the mortgage application?

TB1987

Thrugelmir wrote: »

Your solicitor's are working for the lender not just you. Did you inform the lender of the full facts when making the mortgage application?

I understand that but I do not think they should have the rights to ask for a new mortgage offer without trying to ask us a question about it first. All parties involved are fully aware of the situation (I'm getting a bit sick and tired of people on these boards who jump all over people with family purchases to try and make out they hide things) - we would never try to hide anything like that.

When we instructed the solicitor they listened to the story from us and had a copy of the letter from my parents that laid out the situation in very clear terms. The lender also accepted this letter without any questions so it obviously made sense to them. Considering these solicitors are on thousands of pounds a year, I don't understand where the confusion has come from - our mortgage offer clearly says purchase price £103,000 and so does the letter from my parents. They have confused the valuation price with the purchase price. A simple mistake yes, but they did not need to go and confuse the lender and set us back even more!

Goldiegirl

TB1987 wrote: »

Thanks both. So it actually looks like it is our solicitor who has got confused. We have made it very clear on our contract and the letter from my parents that the deposit is in the form of equity so we are a bit annoyed at this. They also have a copy of the mortgage offer which states purchase price is £103,000.

More annoyingly, instead of just picking up the phone to ask us this question they have decided to write to the Halifax to ask for a new mortgage offer to be issued. Would the Halifax just take their word for this or will they speak to our broker about it first who could clarify the situation again?

Thanks again

As the offer says the purchase price is £103000, the Halifax is aware that this is a discounted purchase, so they'll just write back to the solicitor to tell them to proceed with the offer they have.

Mortgage_Mark_2

I think there's a massive miscommunication here.

It sounds like you're describing a situation where they are gifting you the equity from £130k as a deposit, rather than a discounted purchase price of £103k.

How much deposit were you personally intending to put down?

TB1987

Mortgage_Mark wrote: »

I think there's a massive miscommunication here.

It sounds like you're describing a situation where they are gifting you the equity from £130k as a deposit, rather than a discounted purchase price of £103k.

How much deposit were you personally intending to put down?

There is no miscommunication - our solicitors became confused. The situation was fully explained to our broker who explained it to the Halifax and they were happy to issue the offer with a purchase price of £103,000. My parents solicitors understand it, it was our solicitors who did not.

We are not putting any deposit down. The house has been valued at £130,000 and our mortgage will be for £103,000. The £27,000 is the deposit in the form of equity from my parents.

It is quite a common thing for people to do - the Halifax and broker understood it straight away.

nidO

Frankly this all sounds like you're the one misunderstanding somewhere along the line.

Halifax (and I believe all mortgage providers) calculate the loan to value of what you're borrowing based on whichever is lower of the property's valuation or purchase price.

Therefore, unless you're getting a 100% mortgage from Halifax (which don't exist) having a purchase price of £103,000 means you won't be borrowing £103,000 from them.

As multiple people have tried to explain to you, there are two ways this can be handled.

Either you're buying the property for £130,000 with a gifted deposit of £27,000 leaving you with £103,000 to pay and you getting a 79% mortgage to cover that £103,000.

Or you're buying a property for £103,000 which has been discounted from £130,000 which leaves you with £103,000 to pay, but a 79% mortgage would be based on this £103,000 not £130,000, with Halifax therefore lending you around £81,370, and you needing to come up with the remaining £21 grand.

If you're suggesting that your mortgage broker and Halifax have agreed to something else which is totally contrary to any normal mortgage lending process then you're not explaining things well and it's no wonder your solicitor is confused, because on the face of what you're saying so far your solicitor seems to be the only person who'se actually getting things right to get you the mortgage amount you need.