buying my parents home

saracen1966

ok, my parents have recently moved into a council bungalow because of my fathers disability. i have lived with them for the last 3 years since splitting from my wife. our divorce was finalised in April of this year.
their home is worth between £90-100k
because of my predicament they have offered to sell me their home, they have offered to sell me the house for £70k.
the house will need a lot of work.
because 100% mortgages are not available and what savings i have i would need to carry out work on the house.
My father has proposed that the sale price is £82500, i obtain a mortgage for £70000 (15%) and then give him the remainder from my savings, upon completion he will then give me back the £12500 in order for me to have the work carried out.
is this legal and are there any other implications to be considered?

silvercar

It is legal but you must declare the gifted deposit to the lender in your mortgage application. Not all lenders will allow gifted deposits, so see a broker who will know which lenders will accept them. You should also make your solicitor aware of your plans.

CLAPTON

as I see it

you are buying a house for 82500
you have a deposit from your own money of 12,500
you get a mortgage for 70,000

seems OK to me so you buy the house.

later your father gives you 12,500 to help you renervate the house.

seems OK

Debt_Free_Chick

Clapton's way is a "tidier" suggestion. The amounts don't differ - just the reason for the gift. And this way, it gets around those lenders that don't like gifted deposits.

amcluesent

IIRC a parent 'selling' at less than market-value immediately attracts the interest of the social services and tax-man who fear missing out their cut.

SquatNow

amcluesent wrote: »

IIRC a parent 'selling' at less than market-value immediately attracts the interest of the social services and tax-man who fear missing out their cut.

Depends on if the parents are claiming benefits, but if the parent go onto claim benefits within a set period (7 years) this could come back to haunt both parties.

If you parents want to help you out that much, can't they just rent it to you and then let you buy it in a year when it's worth 30% less?

I can't work out if his parent are really smart and trying to fleece him (by getting him to cash them out of the housing boom at the peak) or not-so-smart-but-very-generous and are trying to help him but don't realise prices are dropping and they are putting their son in negative equity within a year...?

bobby-boy_2

Hi Amcluesent you said" a parent 'selling' at less than market-value immediately attracts the interest of the social services and tax-man "
This is very true but using the figures provided in the 1st post

their home is worth between £90-100k
My father has proposed that the sale price is £82500
and using claptons suggestion of

you are buying a house for 82500
you have a deposit from your own money of 12,500
you get a mortgage for 70,000

a discount of £8500 on a 90K property does not strike me as deprivation of assests as many posters on here are advising to bid 10% to 20% under the asking price.
Just an "Argument" to be used against deprivation of assets.

margaretclare

amcluesent wrote: »

IIRC a parent 'selling' at less than market-value immediately attracts the interest of the social services and tax-man who fear missing out their cut.

Not necessarily.

We did this in 1990 because that was all that family members could afford. SS were never involved and neither was the tax-man.

Of course, prices were a lot different then.

saracen1966

may i thank you all for your responses it has also been noted to me that i only need say the purchase price is £77000 thus i would only need to place the £7000 and obtain a 90% mortgage, then at a later date my father has said he would give me the £7000 as a gift, given that he or my mother have made no substantial gifts for the last 2 years this should be ok.
The reason for the lower than market price i would cite is the amount of modernisation required i'm more than happy with the deal, a £70,000 mortgage is not a lot in todays climate.