Borrowing more than purchase price

Ed-1

Is it possible to borrow more than the amount needed to purchase the property on a purchase mortgage or can this only be done through a subsequent remortgage?

E.g. deposit £60,000. Purchase price £120,000. Borrow £80,000.

This would be to allow all funds in Lifetime ISAs to be withdrawn penalty-free to be used towards the purchase price but then effectively equity released again.

[Deleted User]

Hi you can’t borrow more than up to 95 % of the house value 

housebuyer143

As above, in no circumstance can you borrow more than 95% of a properties value. 

Ed-1

housebuyer143 said:

As above, in no circumstance can you borrow more than 95% of a properties value. 

But you can borrow more than that needed to purchase the property (up to 95% of its value) on a purchase mortgage?

Can this be achieved without lowering the deposit so as to get all the funds out of the Lifetime ISAs penalty-free?

housebuyer143

Ed-1 said:

housebuyer143 said:

As above, in no circumstance can you borrow more than 95% of a properties value. 

But you can borrow more than that needed to purchase the property (up to 95% of its value) on a purchase mortgage?

Can this be achieved without lowering the deposit so as to get all the funds out of the Lifetime ISAs penalty-free?

No, the bank lends only up to what you are paying for the property/what it has been valued at. If you put 5% deposit in, thats 95%, if you put in 20%, thats 80%. You will not get anyone to lend you anymore than the purchase price and then it would be 95% max. 

Ed-1

housebuyer143 said:

Ed-1 said:

housebuyer143 said:

As above, in no circumstance can you borrow more than 95% of a properties value. 

But you can borrow more than that needed to purchase the property (up to 95% of its value) on a purchase mortgage?

Can this be achieved without lowering the deposit so as to get all the funds out of the Lifetime ISAs penalty-free?

No, the bank lends only up to what you are paying for the property/what it has been valued at. If you put 5% deposit in, thats 95%, if you put in 20%, thats 80%. You will not get anyone to lend you anymore than the purchase price and then it would be 95% max. 

So to borrow more you'd have to remortgage later on?

ACG

There is a more complex answer to this, but ultimately when buying you can usually lend up 95% of the lower of the purchase price or valuation. 

Some lenders may go up to 100% in certain circumstances - typically additional security. 
Some lenders may also accept a loan as a form of deposit. So if the purchase price were say £100k and you take out a loan for £25k that in essence gives you what you want in a round about way. 

It is not overly complex, but your options are very limited so its probably not a bad idea to sit down with a broker. 

K_S

Ed-1 said:

housebuyer143 said:

Ed-1 said:

housebuyer143 said:

As above, in no circumstance can you borrow more than 95% of a properties value. 

But you can borrow more than that needed to purchase the property (up to 95% of its value) on a purchase mortgage?

Can this be achieved without lowering the deposit so as to get all the funds out of the Lifetime ISAs penalty-free?

No, the bank lends only up to what you are paying for the property/what it has been valued at. If you put 5% deposit in, thats 95%, if you put in 20%, thats 80%. You will not get anyone to lend you anymore than the purchase price and then it would be 95% max. 

So to borrow more you'd have to remortgage later on?

@ed-1 As ACG said, there are purchase products that may allow you to go to 100% LTV but given what you've said (looking to use as much of your LISA as possible) I don't think they apply to your case.

If you are buying the property below market value (eg: you're buying a property worth 200k for 150k), then it may indeed be possible to look at doing a capital raise remortgage to release cash after you've purchased the property. At the point what LTV you can go to for the remortgage will depend on a few factors including the reason for the cash.

Ed-1

K_S said:

Ed-1 said:

housebuyer143 said:

Ed-1 said:

housebuyer143 said:

As above, in no circumstance can you borrow more than 95% of a properties value. 

But you can borrow more than that needed to purchase the property (up to 95% of its value) on a purchase mortgage?

Can this be achieved without lowering the deposit so as to get all the funds out of the Lifetime ISAs penalty-free?

No, the bank lends only up to what you are paying for the property/what it has been valued at. If you put 5% deposit in, thats 95%, if you put in 20%, thats 80%. You will not get anyone to lend you anymore than the purchase price and then it would be 95% max. 

So to borrow more you'd have to remortgage later on?

@ed-1 As ACG said, there are purchase products that may allow you to go to 100% LTV but given what you've said (looking to use as much of your LISA as possible) I don't think they apply to your case.

If you are buying the property below market value (eg: you're buying a property worth 200k for 150k), then it may indeed be possible to look at doing a capital raise remortgage to release cash after you've purchased the property. At the point what LTV you can go to for the remortgage will depend on a few factors including the reason for the cash.

If you take out a mortgage in a sole name rather than joint so that your wife can continue filling her Lifetime ISA and getting government bonuses, is it then easy for her to then buy a share of the property in 2 years when you remortgage with her? Or is it better to buy the property with her and then remortgage together in 2 years?

K_S

Ed-1 said:

K_S said:

Ed-1 said:

housebuyer143 said:

Ed-1 said:

housebuyer143 said:

As above, in no circumstance can you borrow more than 95% of a properties value. 

But you can borrow more than that needed to purchase the property (up to 95% of its value) on a purchase mortgage?

Can this be achieved without lowering the deposit so as to get all the funds out of the Lifetime ISAs penalty-free?

No, the bank lends only up to what you are paying for the property/what it has been valued at. If you put 5% deposit in, thats 95%, if you put in 20%, thats 80%. You will not get anyone to lend you anymore than the purchase price and then it would be 95% max. 

So to borrow more you'd have to remortgage later on?

@ed-1 As ACG said, there are purchase products that may allow you to go to 100% LTV but given what you've said (looking to use as much of your LISA as possible) I don't think they apply to your case.

If you are buying the property below market value (eg: you're buying a property worth 200k for 150k), then it may indeed be possible to look at doing a capital raise remortgage to release cash after you've purchased the property. At the point what LTV you can go to for the remortgage will depend on a few factors including the reason for the cash.

If you take out a mortgage in a sole name rather than joint so that your wife can continue filling her Lifetime ISA and getting government bonuses, is it then easy for her to then buy a share of the property in 2 years when you remortgage with her? Or is it better to buy the property with her and then remortgage together in 2 years?

@ed-1 With regard to the use of a LISA when doing a Transfer of Equity (which is what it would be in 2 years if you add your wife to the deeds and mortgage) on a mortgaged property, I *think* it may be possible but I'm not sure what other eligibility criteria there is to meet. 
https://forums.moneysavingexpert.com/discussion/6289575/lisa-with-transfer-of-equity
https://forums.moneysavingexpert.com/discussion/5953125/using-lifetime-isa-for-transfer-of-equity

It's not entirely clear to me what you're trying to achieve here or the background numbers but at least from a convenience point of view it might be better to just buy in joint names and use both your LISAs at that point.

se2020

There was a thing during covid that let you withdraw funds from the Lisa penalty free.
Not sure if it's still going?

But, if you want to empty the Lisa out then buy the house, ues the 60k from the Lisa and get a 60k mortgage.
You will then have 60k of equity in the house so should be easy enough to get a 20k loan after purchase if required.
Although I would expect the 2 of you could both get 10k unsecured personal loans easily enough if you need 20k for something.
Just don't apply for them until after you have moved in.