Purchase price lower than value, what LTV?

thudspud

Hi

We have an excellent relationship with our landlord, he urgently needs to sell the property we currently rent from him and is willing to sell to us for less than market value (he is aware he will have to pay CGT on the difference).

property value is around £240,000
selling to us for £200,000
we have £20,000 deposit saved

will the LTV for our mortgage be 90% calculated from the purchase price or 75% calculated from market value?

Wasn’t entirely sure which way it would be calculated, hopefully the latter as that means we can get a much better rate.

Thrugelmir

thudspud said:

 (he is aware he will have to pay CGT on the difference).

Not if the transaction is conducted at arms length. Which begs the question why would anybody forego £40k .............

Snookie12cat

If li believe some places allow gifted deposit in the form of equity from your landlord but not many and then you are limiting massively who you can go with.
I would speak to a broker and talk through both options and see what is better 

thudspud

Thrugelmir said:

thudspud said:

 (he is aware he will have to pay CGT on the difference).

Not if the transaction is conducted at arms length.

Can you please explain this further? Thanks

thudspud

Snookie12cat said:

If li believe some places allow gifted deposit in the form of equity from your landlord but not many and then you are limiting massively who you can go with.
I would speak to a broker and talk through both options and see what is better 

Interesting, so probably worth taking the cheapest tracker and remortgaging as soon as possible to get the LTV down?

Snookie12cat

thudspud said:

Snookie12cat said:

If li believe some places allow gifted deposit in the form of equity from your landlord but not many and then you are limiting massively who you can go with.
I would speak to a broker and talk through both options and see what is better 

Interesting, so probably worth taking the cheapest tracker and remortgaging as soon as possible to get the LTV down?

It really depends who will offer you what. You cant remortgage until 6 months have passed either, so factor that into your calculations as well. 

Scorpio33

The LTV would be 90%. The market value is what someone pays for the property, not what some opinion of the market value is. 

Question is - has this been looked at by 3 agencies? If they all say £240k then it is a bargain, but I question that it would be about £200k and the £240k is pie in the sky.

Thrugelmir

thudspud said:

Thrugelmir said:

thudspud said:

 (he is aware he will have to pay CGT on the difference).

Not if the transaction is conducted at arms length.

Can you please explain this further? Thanks

The relationship between the buyer and seller is such that both are acting independently of each other. 

[Deleted User]

Snookie12cat said:

thudspud said:

Snookie12cat said:

If li believe some places allow gifted deposit in the form of equity from your landlord but not many and then you are limiting massively who you can go with.
I would speak to a broker and talk through both options and see what is better 

Interesting, so probably worth taking the cheapest tracker and remortgaging as soon as possible to get the LTV down?

It really depends who will offer you what. You cant remortgage until 6 months have passed either, so factor that into your calculations as well. 

Day 1 remo is entirely possible 

thudspud

Thanks everyone, good to know.

value is correct, maybe slightly more now, 3 in a row all the same, last one sold for £220000 18 months ago and other for £235000 12 months ago.

Snookie12cat

Deleted_User said:

Snookie12cat said:

thudspud said:

Snookie12cat said:

If li believe some places allow gifted deposit in the form of equity from your landlord but not many and then you are limiting massively who you can go with.
I would speak to a broker and talk through both options and see what is better 

Interesting, so probably worth taking the cheapest tracker and remortgaging as soon as possible to get the LTV down?

It really depends who will offer you what. You cant remortgage until 6 months have passed either, so factor that into your calculations as well. 

Day 1 remo is entirely possible 

Yes, but very limited lender wise and will probably pay a higher rate than the high street lenders.