I have a plan.... Viability?

No1newts

No1newts

No1newts

Soldato
Joined
24 May 2009
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North East
Hello all.

Me and the Missus are wanting to move house, the area we want to move to is stupidly overpriced especially for 4 bedroom which is what we need.

Now my partners grandparents passed away and they have a 2 bed house in that area, you can make an extension on it to get it to 4 bed and the rest is a great size. We can get it cheaper as its a little run down but we'll need the money to do it up.

Now (making up some figures to illustrate the point) lets say they want 200k for the property, its a private sale to family. We say to them you ask for 250k, we get a mortgage for that amount and the extra money they receive (50k) they give to us as we need this to modernise and extend the house.

Basically my thinking being its a lot easier to absorb the X extra amount to modernise and extend the house into a mortgage over 30 years than having a mortgage and high loan repayments all at the sane time.

Additionally the money we are loaning wont be lost as the house about 1/2- 2/3 the value of other houses in the area so doing the work will make it worth more than the extra mortgage we would have (if that makes sense :p)

So can I actually do this or will there be some obstacle I have missed?

Cheers.
 
Now (making up some figures to illustrate the point) lets say they want 200k for the property, its a private sale to family. We say to them you ask for 250k, we get a mortgage for that amount and the extra money they receive (50k) they give to us as we need this to modernise and extend the house.
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Will the mortgage lender give you 250K though ?
 
I am by no means an expert but it sounds a bit... dodgy if not illegal? You're essentially lying about the size of a transaction to get a larger mortgage?
 
I'm not sure. Does/can the mortgage lender say "no we think its overvalued we won't give you a mortgage"? We can afford a mortgage for the amount we would need.
 
You can't do it.

The mortgage lender will do a valuation of the house to make sure it's worth what they are lending you. They will not let you borrow more than what they believe is the fair market value.

I'd certainly hope they are competent to spot a £50K difference!
 
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What is the actual street-value of the property at the moment? This is the maximum amount that the mortgage lender will lend against, minus your deposit.
 
No1newts said:
Now (making up some figures to illustrate the point) lets say they want 200k for the property, its a private sale to family. We say to them you ask for 250k, we get a mortgage for that amount and the extra money they receive (50k) they give to us as we need this to modernise and extend the house.
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This part sound a little fraudulent to be fair. The mortgage provider will probably loan on 80-95% of value of the house rather than simply what is asked for it....just get a mortgage that allows additional borrowing.
 
Ah ok :(

So mortgage lender says this place is worth X amount that's the most we will lend you?

So essentially our only chance is if we get a "family discount" so they want 20k less, but we still get mortgage amount for value. Could that work?
 
Castiel said:
This part sound a little fraudulent to be fair. The mortgage provider will probably loan on 80-95% of value of the house rather than simply what is asked for it....just get a mortgage that allows additional borrowing.
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Are there any of those left?

Couldn't find when we bought my last property, though that was when the FC first hit.
 
Do you have any money saved up?

Me and my wife purchased a house from the family as above we didnt have any savings but we managed to get a discount on the house for a quick sale and that mortgage company used the discount as our deposit so we didnt need one, that could be the only way I think you might have some funds if you actually have some money saved you could use that instead of paying a large deposit.
 
Slade2 said:
Do you have any money saved up?

Me and my wife purchased a house from the family as above we didnt have any savings but we managed to get a discount on the house for a quick sale and that mortgage company used the discount as our deposit so we didnt need one, that could be the only way I think you might have some funds if you actually have some money saved you could use that instead of paying a large deposit.
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How does that work?

Making up figures again here but you wanted a property, valued at 180, family will take 160 you get a mortgage for 180 bank use 18k of the 20 extra as deposit and what happened to the rest? Or did it all become a deposit?

We have some savings, plus selling our existing house we would have around 10k (value of ourbplace dropped, not in negative but would not bring much out of it) but you are probably talking 30-40 to sort the place.
 
Can you wait till the new year? I am pretty certain the new govement home buyer scheme gets extended to any propety on the 1st of Jan so you need 5% deposit the govement lends you 20% deposit that is intrest free for 5 years and then you start paying 2.6% interest and you have 25 years to pay them back.

This will help you as you only have to pay a small deposit and the rest you have saved can go to extending the property.
 
You will need a minimum of 10% of the value of the property as a deposit. If the house is worth £180k, you buy it for £160k then there is your deposit - however this doesn't allow for the "renovations" that you're talking about.
 
No1newts said:
Now (making up some figures to illustrate the point) lets say they want 200k for the property, its a private sale to family. We say to them you ask for 250k, we get a mortgage for that amount and the extra money they receive (50k) they give to us as we need this to modernise and extend the house.
Click to expand...

:facepalm
 
A mortgage lender will usually only lend up to 90% of the value of the property. They will send their own estate agent round to do an independant valuation.

There is a chance that their independant valuation will match what you're asking them to do... theres a very good chance it wont.
 
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