A mortgage for LESS than the house value is the norm nowadays. Especially since the 100% mortgage has gone.
And the % between value and mortgage amount means you get a better/Worse deal on your APR....I thought everybody knew that
Mortgage Question
- Thread starter leigh_boy
- Start date
A mortgage for LESS than the house value is the norm nowadays. Especially since the 100% mortgage has gone.
And the % between value and mortgage amount means you get a better/Worse deal on your APR....I thought everybody knew that
It would probably be more fair of me to state that I have worked in mortgages for the last 13 years 
I have also just confirmed point 2 I made on checking a well known lenders criteria and it would appear on the face of it there is indeed a lender (maybe more) that would do this with no additional deposit from the buyer.
I have also just confirmed point 2 I made on checking a well known lenders criteria and it would appear on the face of it there is indeed a lender (maybe more) that would do this with no additional deposit from the buyer.
Soldato
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I do not think you have chucked any question out here.
All of the OP seems to relate to incorrect information, retold to you by your mate , who doesn't remotely understand the situation.
Best guess, they want him to buy the house at its current value, thus oaying off their interest only mortgage, and netting the mother 110k, then hilariously, when he has paid off his own mortgage, and finally sells the property, they want him to give them more money, this time for the father.
Thus he will be out of pocket twice.
Utter hilarity, either all three of them have absolutely no understanding, or it has been reported incorrectly, or better yet, they do understand and are utterly ripping off their own child.
Awful.
Soldato
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This thread is so full of fail
OP - Ignore all the calls of dodgy tax dodging etc and not getting a mortgage agreed because of this - It is total nonsense.
This is called a transaction at undervalue, where the vendor is effectively gifting the purchaser part of the equity.
Once he has established the numbers - A good broker is the next step (not one of the conveyorbelt farms like L&C).
The main nonscence applies when they have a 150k house, with an interest only mortgage that someone is suggesting selling for 110k.
It makes absolutely no sence.
Assuming they actually want it sold at 260, pay off the mortgage with 150, and give the 110k to the mother.
How the father thinks he retains any share in the building after that is beyond me.
Somehow they seem to think they gain further equity after no longer owning the property.
Sounds like a future episode of jeremy kyle waiting to happen.
My divorced parents ripped me off in the divorce.
It would probably be more fair of me to state that I have worked in mortgages for the last 13 years
I have also just confirmed point 2 I made on checking a well known lenders criteria and it would appear on the face of it there is indeed a lender (maybe more) that would do this with no additional deposit from the buyer.
Beat you by almost a decade! lol
Having had a recent (quite similar) situation with a client, where the gifted equity was in the region of 40% and was a genuine attempt of the parents to give a partial payment of inheritance while they were alive.. We got to the point where the case had gone for final checks and the underwriter pulled the plug as she didn't feel comfortable with it..
The lending criteria would suggest it is ok but remember, at the end of the day it will be a person sitting in underwriting that will sign off on it..
Lending criteria are only guidelines.. not black and white rules..
That lender began with an 'N' by the way and they are 'all over the country!' cryptic puzzle for you to enjoy there!
The tax implications of effectively being handed a £200k gift (it is irrelevant whether it is in cash or bricks and mortar, it will need to be declared) are potentially pretty horrendous.
You need to look at this from an underwriters point of view.. Parents are divorcing and have a property worth almost £300k.. are happy to write off 2/3 of that just so the mortgage can be paid off. Now.. unless they are absolutely loaded (which they may be but the circumstances would suggest otherwise) this is just not really plausible when looking at it from the outside... It would trigger every alarm in the underwriting department!
I think the important point here is that... without knowing ALL the facts (know your customer and all that !) we aren't really in a position to give any guidance at all.. it could be the divorced parents have both moved on and this property was retained and let out etc.. which would put a COMPLETELY different slant on things.. On the surface, with the info as given, I think he will struggle... however, the true situation may be totally different..
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Just because one conservative lender wouldn't do something doesn't mean another wouldn't. With all the correct indemnity insurance in place for the buyer and the signing of the relevant legal advice for all parties there is no reason it couldn't be agreed. Granted it's not for every lenders appetite but the one you speak of isn't exactly liberal with its decisions.
And yet their lending criteria would suggest it is perfectly acceptable... in practice it isn't..
What has indemnity insurance got to do with a lending decision?
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yeah that is interesting... explains it at least - I didn't think you could simply sell that far below market value but it does makes sense if they allow you to but simply base any CGT or IHT on the actual market value... they're then taken care of and your private below market deal is up to you
Soldato
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Nobodies mentioned off shore bank accounts to get free money for the house? It's the in thing! Everybody's doing it! 
your not wrong and id go with ripping him off.
either way iv lost interest and said to him its well over my head .
Another factor to bear in mind is that most sale prices are now readily available which means that your friend could have (minor) difficulties in future with regard to selling the property. The reason being that if records show the property was sold for £110k in 2016 and then in say 2018 he's got it on the market at £300k some prospective buyers may be put off a bit i.e. is there some hidden history here that explains why the house was so cheap a couple of years ago or perhaps he is taking the mick with asking price. Websites that provide an 'estimated' value will also likely be influenced by this data.
Not a big factor as ultimately valuations and general comparison with other properties would show the value of the house, and ultimately one is quids in if you get a house for under 50% of market value..
Not a big factor as ultimately valuations and general comparison with other properties would show the value of the house, and ultimately one is quids in if you get a house for under 50% of market value..