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  • FIRST POST
    • kieranw7261
    • By kieranw7261 10th May 18, 4:20 PM
    • 1Posts
    • 0Thanks
    kieranw7261
    Property deposit from seller
    • #1
    • 10th May 18, 4:20 PM
    Property deposit from seller 10th May 18 at 4:20 PM
    Hi All,

    We are looking to buy our first property.
    We are currently renting the property from my partners mums boyfriend.
    He has told us he will give us a discount on the property.

    Can this discount be applied to the mortgage deposit?

    Thanks in advance
Page 1
    • nyermen
    • By nyermen 10th May 18, 4:30 PM
    • 181 Posts
    • 135 Thanks
    nyermen
    • #2
    • 10th May 18, 4:30 PM
    • #2
    • 10th May 18, 4:30 PM
    As far as I'm aware, yes. Always assuming their valuation of the house (pre discount) is the same as the banks, any discount should be considered equity. I can't promise some lenders won't have an archaic rulebook of course.

    The term "mortgage deposit" is a bit misleading. In reality, it is your contribution to the house (unless it is a special type of mortage - an offset mortgage), and the bank cares about the "LTV" (loan to value). So assuming they both value the house at 100,000 and the "relative" is willing to sell to you for 75,000, then your "LTV" is 75%.
    If you had 25k saved towards the house instead, the LTV would be the same, so the bank would be as happy.

    Btw - Others may be want to say to be cautious about any deal from a friend/relative, is it in writing, etc etc...
    Peter

    Debt free - finally finished paying off 20k + Interest.
    • kingstreet
    • By kingstreet 10th May 18, 4:40 PM
    • 33,703 Posts
    • 18,281 Thanks
    kingstreet
    • #3
    • 10th May 18, 4:40 PM
    • #3
    • 10th May 18, 4:40 PM
    The landlord tenant relationship is the important one here.

    The familial relationship isn't sufficiently strong. You will have fewer lenders to choose from than a true family purchase at undervalue.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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