Advice re house purchase from partner's family

Hoploz

I think it might be an idea if you go to the library and get a book or two about the process. Read the link above as well. There are quite a few things to consider when buying a house, and it sounds like the advice/help/info you have had so far from the family member is a bit simplistic, not to mention one-sided. It is a serious business with responsibilities and you need to know what you're doing. You need a solicitor to protect your interests and to deal with all the necessary paperwork. Just because someone else in the family passed it on without legal advice does not mean you should do so as well. If you are getting a mortgage the solicitor looks after the lender's interests as well, ensuring all is as it should be with the property. It's not the gifting that puts me off, that's just an aside, but more it's the suggestion of not using a solicitor, when you don't seem to have any idea what needs to be done, is the main thing that is a bad idea. If you need a mortgage, you will need a solicitor. And the solicitor's advice could just be very very useful.

DebtClearer

Hoploz wrote: »

I think it might be an idea if you go to the library and get a book or two about the process. Read the link above as well. There are quite a few things to consider when buying a house, and it sounds like the advice/help/info you have had so far from the family member is a bit simplistic, not to mention one-sided. It is a serious business with responsibilities and you need to know what you're doing. You need a solicitor to protect your interests and to deal with all the necessary paperwork. Just because someone else in the family passed it on without legal advice does not mean you should do so as well. If you are getting a mortgage the solicitor looks after the lender's interests as well, ensuring all is as it should be with the property. It's not the gifting that puts me off, that's just an aside, but more it's the suggestion of not using a solicitor, when you don't seem to have any idea what needs to be done, is the main thing that is a bad idea. If you need a mortgage, you will need a solicitor. And the solicitor's advice could just be very very useful.

I have established they will be using a solicitor to the transaction.

Hoploz

Thank goodness for that!

slowpoke_rodriguez

DebtClearer wrote: »

I have established they will be using a solicitor to the transaction.

Who is "they"?
Whoever "They" are, you need your own solicitor!

Person_one

DebtClearer wrote: »

In theory my gf could move home but she doesn't want to for family reasons. If we don't buy the house then she will be forced to as gf's sister will sell on open market which could have a very bad impact on our relationship.

If you don't think your relationship would survive your girlfriend moving home, then why are you considering making such a huge commitment as buying a house together?

Why not save while you can now you are debt free, then if the sister does sell up you could rent somewhere together to see how things go when you are living together just the two of you.

Annisele

DebtClearer wrote: »

I'm not entirely sure the house is worth £150k. As discussed the house that sold near it is far better and I doubt went for the full asking price of £157k (most don't). Would this matter? I have simply been looking at it in the sense that as the £7.5k is gifted as long as the value stays at £142.5k we would be OK to proceed?

Yes, that would matter.

Mortgage lenders have various products, for different LTVs (loan to value). For example, if you choose a 95% LTV product, the lender will lend a maximum of 95% of the amount the house is worth. And that amount will be determined by the lender (in practice, by a surveyor working on their behalf).

Lets assume the lender's valuer says the house is only worth £145k. Let's also assume the lender is happy with vendor gifted deposits (many aren't). In that case, the maximum you could borrow would be £137,750 (95% of £145k). If the sister wanted £142.5k, you'd have to come up with £4,750 plus fees and stamp duty before the purchase could go ahead.

Edit: In the same scenario (£145k valuation), but this time assuming the lender wasn't happy with vendor gifted deposits, the V in LTV would be the lower of the lender's valuation and the actual purchase price. So, a £142.5k purchase price would mean you'd have to come up with a deposit of £7,125 (again, plus fees and stamp duty).

DebtClearer

slowpoke_rodriguez wrote: »

Who is "they"?
Whoever "They" are, you need your own solicitor!

The one solicitor firm will act between both of us to complete the transaction.

DebtClearer

Person_one wrote: »

If you don't think your relationship would survive your girlfriend moving home, then why are you considering making such a huge commitment as buying a house together?

Why not save while you can now you are debt free, then if the sister does sell up you could rent somewhere together to see how things go when you are living together just the two of you.

Without going in to it there are reasons regarding health of family why moving home would not be an easy thing to do.

Person_one

DebtClearer wrote: »

Without going in to it there are reasons regarding health of family why moving home would not be an easy thing to do.

Why can you not move into rented together for a bit? Its rarely a good idea to jump straight into joint home ownership without a trial of actually living together first.

DebtClearer

Annisele wrote: »

Yes, that would matter.

Mortgage lenders have various products, for different LTVs (loan to value). For example, if you choose a 95% LTV product, the lender will lend a maximum of 95% of the amount the house is worth. And that amount will be determined by the lender (in practice, by a surveyor working on their behalf).

Lets assume the lender's valuer says the house is only worth £145k. Let's also assume the lender is happy with vendor gifted deposits (many aren't). In that case, the maximum you could borrow would be £137,750 (95% of £145k). If the sister wanted £142.5k, you'd have to come up with £4,750 plus fees and stamp duty before the purchase could go ahead.

Edit: In the same scenario (£145k valuation), but this time assuming the lender wasn't happy with vendor gifted deposits, the V in LTV would be the lower of the lender's valuation and the actual purchase price. So, a £142.5k purchase price would mean you'd have to come up with a deposit of £7,125 (again, plus fees and stamp duty).

Thanks for the info above.
How do you deal with the matter of estate agents inflating prices against the lender looking to identify the true value? Would it be more sensible to try and agree a price lower than what the estate agents have said?