Ross-Kemp Posted 14 February 2014 Posted 14 February 2014 Fellow foxestalkers, I'm hoping somebody can help / point me in the right direction. I'm currently looking at buying a house which is worth around £40-£50k more than I'll pay. Will this work in my favour / against me / have no bearing at all ?
hairy Posted 14 February 2014 Posted 14 February 2014 In your favour. There will be a survey on behalf of the mortgage lender which will assess the state of the property and its value to ensure their money lent is less than the value of the house and therefore safe.
Guest Mickyblueeyes Posted 14 February 2014 Posted 14 February 2014 Are you talking about purchasing at an undervalue? i.e less then the actual value of the property?
cambridgefox Posted 14 February 2014 Posted 14 February 2014 Fellow foxestalkers, I'm hoping somebody can help / point me in the right direction. I'm currently looking at buying a house which is worth around £40-£50k more than I'll pay. Will this work in my favour / against me / have no bearing at all ? Which part do you need advice on? The mortgage part,which would be upto your personal affordability and the lenders.Or the fact that the house is more than you are willing to pay?If the latter chance your arm by offering low.Nothing to lose but tests the water.
Strokes Posted 14 February 2014 Posted 14 February 2014 if you are getting it for 40-50k below its obvious worth, then chances are there is something wrong that may not be obvious. My only advice would be to proceed with caution, don't skimp on solicitors and surveyors on this one.
Ross-Kemp Posted 14 February 2014 Author Posted 14 February 2014 if you are getting it for 40-50k below its obvious worth, then chances are there is something wrong that may not be obvious. My only advice would be to proceed with caution, don't skimp on solicitors and surveyors on this one. Yeah it will be valued at around £180k+ but I'm buying it from a family member for what's left on the mortgage (around £137k). Nothing wrong with the house, it's just easier for me and for them to sell at that price (if that makes sense) I know my OP wasn't very clear do I have a better chance of securing a mortgage based on the above ?
LanguedocFox Posted 14 February 2014 Posted 14 February 2014 Yeah it will be valued at around £180k+ but I'm buying it from a family member for what's left on the mortgage (around £137k). Nothing wrong with the house, it's just easier for me and for them to sell at that price (if that makes sense) I know my OP wasn't very clear do I have a better chance of securing a mortgage based on the above ? Assuming the valuation is really £180K, and depending on your income, and whether you have anything to put down, then yes you do have a much better chance. Lenders usually lend a proportion of their valuation of a property, which is usually less than the market rate. If you were buying it for £180K, and a mortgage supplier valued it at (say) £160K, they would usually be prepared to lend - again, depending on other conditions and circumstances - up to 80% of that (128K). So they would be more than happy to lend you 80% of the £137K (about £110K) - maybe more.
Monk Posted 14 February 2014 Posted 14 February 2014 Get the property valued independently, and then go chat to the bank. Will probably work in your favour.
Guest Mickyblueeyes Posted 14 February 2014 Posted 14 February 2014 Yeah it will be valued at around £180k+ but I'm buying it from a family member for what's left on the mortgage (around £137k). Nothing wrong with the house, it's just easier for me and for them to sell at that price (if that makes sense) I know my OP wasn't very clear do I have a better chance of securing a mortgage based on the above ? in terms of your mortgage I dont think it would have that much of impact unless there valuation was considerably lower than what you are paying. On legals be very careful as you know the "seller". Why is this family friend willing to drop an asset by 40/50k? if they are in financial difficulty it may be worth considering indemnity insurance incase the seller becomes insolvent any time in the future. as the transaction can be reveresed by the trustee in bankruptcy if they deem it at an undervalue. May be worth looking into a deed of gift element.
Ross-Kemp Posted 14 February 2014 Author Posted 14 February 2014 On legals be very careful as you know the "seller". Why is this family friend willing to drop an asset by 40/50k? if they are in financial difficulty it may be worth considering indemnity insurance incase the seller becomes insolvent any time in the future. as the transaction can be reveresed by the trustee in bankruptcy if they deem it at an undervalue. May be worth looking into a deed of gift element. Split with the wife, all the kids moved out, house too big for him, we need a bigger house.No financial difficulty there as he's got a wedge in the bank. I'm able to put a fair amount down for a deposit as well £15k-£20k) and have a joint income of £39k.
Strokes Posted 14 February 2014 Posted 14 February 2014 Split with the wife, all the kids moved out, house too big for him, we need a bigger house. No financial difficulty there as he's got a wedge in the bank. I'm able to put a fair amount down for a deposit as well £15k-£20k) and have a joint income of £39k. if he has large savings why don't you get him to loan you the 40k as a deposit, which he would get back upon completion. That would eradicate any future implications and guarantee the mortgage application.
The Year Of The Fox Posted 14 February 2014 Posted 14 February 2014 You can borrow 4x your salary now. That's what my mortgage adviser told me last night
Vlad the Fox Posted 16 February 2014 Posted 16 February 2014 You're situation is pretty much exactly the same as mine when buying my house. On my experience I would say yes as you will be buying an house with a lot of equity in it especially after you deduct your large deposit from the purchasing price. Obviously no one on here knows the house, your family member, and if they can be trusted but if you're happy with them I would say go ahead, a good solicitor and survey will find anything that would threaten the value of property so I would say go ahead if it's in an area you really want to live.
Benji Posted 16 February 2014 Posted 16 February 2014 Although there's generally nothing wrong with related party transactions that are genuine like this, the first thing that always comes to my mind is is there a tax consequence. In this case, as a guess you might have to pay stamp duty on the market value and not the amount actually paid... But as Strokes says, don't skimp on a solicitor. One of the best things about them on residential property sales is their insurance pot should they mess up! EDIT: I've just had a look and you might be OK on the SDLT point. Worth running the situation past someone though.
promised land Posted 16 February 2014 Posted 16 February 2014 You can borrow 4x your salary now. That's what my mortgage adviser told me last night All well and good but the banks interest rate has been 0.5% now for a record time. It will go up and go up a lot when they start increasing it, meaning mortgage rates will rise too. So if you are going all out now and putting everything you earn into paying back the monthly mortgage, how will you get by in 5 years time when it's back to where it averages. Ok fixed mortgages will get you by in the short term but they're aren't many 25 year fixed ones out there. I would never mortgage to the max of my income.
The Year Of The Fox Posted 16 February 2014 Posted 16 February 2014 No I know. I haven't done this either. My mortgage adviser also told me she went to a conference this week where they were told to now start talking to customers/preparing them for the interest rates to rise to about 3% before too long. I'm currently on an SVR at 4% but will be getting locked in on one at either 3.08% or the very worst case 3.9% depending on the LTV
promised land Posted 16 February 2014 Posted 16 February 2014 I'm currently on an SVR at 4% but will be getting locked in on one at either 3.08% or the very worst case 3.9% depending on the LTV I'm also on a variable at 3.99%, have been for a few years since my tracker ended as nothing is out there that is cheaper over the 2,3 or 5 year period when you add in the fee to take it up. When I took my present mortgage out in 2001 the fee was £200, now they are a grand or more. A big difference in the whole scheme of it but I will have mine paid off in full by the end of this year. At one point my tracker was below the bank rate for a good few months. When it ended the banks had already got in a mess and the rate had dropped so the variable was the best option out there. This will happen to mortgage owners in the near future when the rate does go up.
The Year Of The Fox Posted 16 February 2014 Posted 16 February 2014 Thr product I'm going for has £200 fee. Definitely worth it for financial security
rico Posted 18 February 2014 Posted 18 February 2014 Anyone used any of the help to buy schemes? And would you reccomend them?
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