Under market value mortgage

Legacy_user

Hi,

My husband and I are wanting to buy our first home. My parents have said we can buy their house for under market value. The problem is my partner missed a couple of payments on a credit card however this was 2 years ago and the debt has now been cleared.

My parents would be willing to sell their 300k home to us for 250k.

Couple of questions...

What is the best type of mortgage for this?
Would we need a deposit as my parents are will to sell to us for under market value and contribute a deposit also?
Would we be able to get a mortgage with my parents bad credit?

Any help would be appreciated because I don't even know where to start!
Thanks

MortgageMamma

Ncreig wrote: »

Hi,

My husband and I are wanting to buy our first home. My parents have said we can buy their house for under market value. The problem is my partner missed a couple of payments on a credit card however this was 2 years ago and the debt has now been cleared.

My parents would be willing to sell their 300k home to us for 250k.

Couple of questions...

What is the best type of mortgage for this?
Would we need a deposit as my parents are will to sell to us for under market value and contribute a deposit also?
Would we be able to get a mortgage with my parents bad credit?

Any help would be appreciated because I don't even know where to start!
Thanks

Hello

Its not possible to say based on what you have typed on here whether it is possible or not, however I can confirm you can do a concessionary purchase without a deposit, but other factors in your case may prohibit that. A couple of missed payments should'nt be a big problem so long as they are not missed mortgage payments.

If you are attempting to do something like this is makes sense to take professional advice and get it right first time saving you time and money. Speak to a whole of market mortgage adviser, the initial bit of advice won't cost you a lot and as long as their fees is reasonable you should get a valuable service where they take care of everything for you.

Added to that, getting this wrong could be costly.

cooltt

Ncreig wrote: »

Hi,

My husband and I are wanting to buy our first home. My parents have said we can buy their house for under market value. The problem is my partner missed a couple of payments on a credit card however this was 2 years ago and the debt has now been cleared.

My parents would be willing to sell their 300k home to us for 250k.

Couple of questions...

What is the best type of mortgage for this?
Would we need a deposit as my parents are will to sell to us for under market value and contribute a deposit also?
Would we be able to get a mortgage with my parents bad credit?

Any help would be appreciated because I don't even know where to start!
Thanks

The reply from @mortgagemamma is not entirely correct and i'm surprised a "mortgage advisor" would not suggest the obvious.

I can sell you my house for what ever price i like, it does not have to be market value. I can also "gift" you the deposit of however much i like as long as i can demonstrate that gift is not the proceeds of criminal activity.

As for the missed payments they are visible to lenders for 6 years but both your entire credit histories are taken into account, some lenders might still lend on it some won't. You can ask what their lending criteria is before any searches of credit files are carried out.

Your parents bad credit is not your bad credit.
What your proposing is in no way complicated for the reasons i've said.

amnblog

I’m afraid Cooltt that you are missing the point here.

Yes, Ncreig’s can sell her and her husband their property for any price they want, or even gift it to them in it entirety.

The problem arises where the new owner wishes to raise a mortgage to make the purchase. Given a cash deposit of sufficient size, Lenders do not have a problem. Where there is no cash available from the buyers for deposit we are in the realms of concessionary purchase which Mortgage Mamma alluded to.

Concessionary purchases are not straightforward and should be handled by a mortgage Broker.

Where the buyer displays a particularly poor credit history a minimum 5% deposit in cash from the buyers funds may be required. It sounds like a deposit will not be necessary in this case.

ACG

The late payments do not sound like a problem, they are relatively minor and fairly historic.

You would probably not need a saved deposit, but if you have one it will boost the scoring of your application and improve the chances of acceptance (but I doubt it will be needed).

I would expect normal rates to be achievable from what you have said.

If you were prepared to put the time and effort in to do the research thoroughly (and I do not mean finding a lender who will do it as there are a few, I mean finding a lender who will do it and is likely to accept the credit issues) then you probably do not need a broker. But I do think it would be a good idea to use one.

They can find the lenders most likely to accept it and in addition to you being first time buyers, you have someone on side to do it all for you. But I think a lot depends on your ability and time. I have seen people who research cases and do better jobs than some brokers. I have also seen people who do research and come across a lender which is akin to using a sledgehammer to crack a nut... or worse, find a lender who on the face of it will do it, but in practice - wont.