How does renegotiating house price raise funds for work needed?

user1977

JReacher1 said:

You can agree with the seller to give you some money after completion to cover your repair costs. So your mortgage stays the same amount but they give you say £5k back after completion. 

If your lender agrees. It's likely they'd treat as being no different to a reduction in the price, so wouldn't work.

jonnydeppiwish!

desgirl14 said:

Hello!
I’m a first time buyer and had and offer accepted on a great house, searches have all been done but the homebuyers survey has highlighted a couple of structural issues that I would really like resolved before moving in.
I am in the process of getting some quotes done and would like to negotiate the price down with the seller, but, and this may be a really stupid question, I don’t understand how this can actually help me afford to do the work which is how it reads on most of the articles I’ve read. Please can someone give me a little more insight if possible?

For example:
Original house purchase price could be £200,000 and a 10% deposit of £20,000, but let’s say I need £10,000 of work done, by reducing the house price to £190,000 I’ve only saved myself £1,000 to go towards the work on the house if I then have a £19,000 deposit.

I think I can afford the work that needs doing if I don’t do all of the cosmetic changes I wanted to do on purchase but I’m wondering if I’m missing some benefit of renegotiating the house price? Any help understanding would be much appreciated! 

What work needs doing to justify reducing the offer? 

JReacher1

user1977 said:

JReacher1 said:

You can agree with the seller to give you some money after completion to cover your repair costs. So your mortgage stays the same amount but they give you say £5k back after completion. 

If your lender agrees. It's likely they'd treat as being no different to a reduction in the price, so wouldn't work.

It would work. The lender isn’t involved in this as you pay the full price of the house. There is just a separate agreement with the seller to give you a cash amount on completion. So would work as follows-

house £200k
deposit £20k

on completion the seller refunds £5k to the buyer as a cash lump sum. 

It’s not standard but have a friend who did this before when the survey identified some issues. 

Slithery

JReacher1 said:

user1977 said:

JReacher1 said:

You can agree with the seller to give you some money after completion to cover your repair costs. So your mortgage stays the same amount but they give you say £5k back after completion. 

If your lender agrees. It's likely they'd treat as being no different to a reduction in the price, so wouldn't work.

It would work. The lender isn’t involved in this as you pay the full price of the house. There is just a separate agreement with the seller to give you a cash amount on completion. So would work as follows-

house £200k
deposit £20k

on completion the seller refunds £5k to the buyer as a cash lump sum. 

It’s not standard but have a friend who did this before when the survey identified some issues. 

Did your friend also know that this would be illegal and that they'd be committing mortgage fraud if it wasn't declared to the lender?

JReacher1

Slithery said:

JReacher1 said:

user1977 said:

JReacher1 said:

You can agree with the seller to give you some money after completion to cover your repair costs. So your mortgage stays the same amount but they give you say £5k back after completion. 

If your lender agrees. It's likely they'd treat as being no different to a reduction in the price, so wouldn't work.

It would work. The lender isn’t involved in this as you pay the full price of the house. There is just a separate agreement with the seller to give you a cash amount on completion. So would work as follows-

house £200k
deposit £20k

on completion the seller refunds £5k to the buyer as a cash lump sum. 

It’s not standard but have a friend who did this before when the survey identified some issues. 

Did your friend also know that this would be illegal and that they'd be committing mortgage fraud if it wasn't declared to the lender?

Can’t imagine so. Was ten years ago though. He’s sold and bought a new house since. 

user1977

JReacher1 said:

user1977 said:

JReacher1 said:

You can agree with the seller to give you some money after completion to cover your repair costs. So your mortgage stays the same amount but they give you say £5k back after completion. 

If your lender agrees. It's likely they'd treat as being no different to a reduction in the price, so wouldn't work.

It would work. The lender isn’t involved in this as you pay the full price of the house. There is just a separate agreement with the seller to give you a cash amount on completion. 

Why would it be a separate agreement, unless you were doing it fraudulently?

JReacher1

user1977 said:

JReacher1 said:

user1977 said:

JReacher1 said:

You can agree with the seller to give you some money after completion to cover your repair costs. So your mortgage stays the same amount but they give you say £5k back after completion. 

If your lender agrees. It's likely they'd treat as being no different to a reduction in the price, so wouldn't work.

It would work. The lender isn’t involved in this as you pay the full price of the house. There is just a separate agreement with the seller to give you a cash amount on completion. 

Why would it be a separate agreement, unless you were doing it fraudulently?

It was done as part of the house sale and was covered by a legal agreement drawn up between the two solicitors. On completion the seller agree to pay £5k to my friend which was used to fix a couple of things that were wrong with the house. 

I don’t think see how this can be fraud. 

Slithery

JReacher1 said:

user1977 said:

JReacher1 said:

user1977 said:

JReacher1 said:

You can agree with the seller to give you some money after completion to cover your repair costs. So your mortgage stays the same amount but they give you say £5k back after completion. 

If your lender agrees. It's likely they'd treat as being no different to a reduction in the price, so wouldn't work.

It would work. The lender isn’t involved in this as you pay the full price of the house. There is just a separate agreement with the seller to give you a cash amount on completion. 

Why would it be a separate agreement, unless you were doing it fraudulently?

It was done as part of the house sale and was covered by a legal agreement drawn up between the two solicitors. On completion the seller agree to pay £5k to my friend which was used to fix a couple of things that were wrong with the house. 

I don’t think see how this can be fraud. 

Because the lender has to be fully informed about about any financial arrangement involving the property they are lending money on so they can properly calculate their risk. Anything else is 'obtaining money by false pretenses'. Which is legally called fraud...

user1977

JReacher1 said:

user1977 said:

JReacher1 said:

user1977 said:

JReacher1 said:

You can agree with the seller to give you some money after completion to cover your repair costs. So your mortgage stays the same amount but they give you say £5k back after completion. 

If your lender agrees. It's likely they'd treat as being no different to a reduction in the price, so wouldn't work.

It would work. The lender isn’t involved in this as you pay the full price of the house. There is just a separate agreement with the seller to give you a cash amount on completion. 

Why would it be a separate agreement, unless you were doing it fraudulently?

I don’t think see how this can be fraud. 

Because the lender will expect the borrower (and their solicitor) to declare the actual net price being paid, not just a fake "headline" price which ignores the cashback element.

Even if you can't see the problem, it's a suggestion best ignored by the OP.

JReacher1

user1977 said:

JReacher1 said:

user1977 said:

JReacher1 said:

user1977 said:

JReacher1 said:

You can agree with the seller to give you some money after completion to cover your repair costs. So your mortgage stays the same amount but they give you say £5k back after completion. 

If your lender agrees. It's likely they'd treat as being no different to a reduction in the price, so wouldn't work.

It would work. The lender isn’t involved in this as you pay the full price of the house. There is just a separate agreement with the seller to give you a cash amount on completion. 

Why would it be a separate agreement, unless you were doing it fraudulently?

I don’t think see how this can be fraud. 

Because the lender will expect the borrower (and their solicitor) to declare the actual net price being paid, not just a fake "headline" price which ignores the cashback element.

Even if you can't see the problem, it's a suggestion best ignored by the OP.

I’ll stick with trusting the legal advice that was provided at the time by the solicitors as opposed to the musings of a random anonymous person on the forum 😉