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waccoe

Is This Acceptable/legal?

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My son is wanting to buy our house and I`m wondering if the following scenario is acceptable/legal. we intend to sell him the house at 90% of the valuation/market value thus enabling him as a FTB to get a 90% mortgage which will pay for the house in full. the remaining 10% will be a loan from us which he can pay off at his leisure.

Is this likely to cause any problems? i.e. will the conveyancing solicitor or b/society question where the remainder of the purchase price is or will it be ok providing that we pay off our current mortgage and have sufficient monies for the deposit on our new house.

I`m just trying to get my head round the logistics of actually doing this.cheers.

Edited by waccoe

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I could be wrong, but I think that mortgage valuations tend to be either a fair market valuation or the sale price, whichever is lower. That means that if the mortage lender wants a 10% deposit, dropping the price from 100k to 90k doesn't drop the deposit from 10k to nothing but from 10k to 9k.

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That sounds right. Afterall your son would still have another loan and no real equity, which would be risky for the bank. Also norte that loans are much more expensive at 90% than 75%. Not being funny but don't you think your son should have to save something to buy a house. He would probably apprecitae uit more if he had to save some 10% himself.

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That sounds right. Afterall your son would still have another loan and no real equity, which would be risky for the bank. Also norte that loans are much more expensive at 90% than 75%. Not being funny but don't you think your son should have to save something to buy a house. He would probably apprecitae uit more if he had to save some 10% himself.

Depends on the situation, some banks used to do this, but they may have changed their attitude over the past few years. If the loan from parents is interest free and just pay us back whenever u can then who cares. The dude still has equity as far as the bank cares, if it repos the house it ain't gonna pay back his parents their loan is it...

Point about saving for a depo is a good one but honestly that's half the point of getting ur parents to help out right?

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He`cs currently renting with his girlfriend so saving for a deposit as well (which they are doing) is a slow process. Our concern is that, by the time they`ve saved enough for the deposit and all the attached costs if house prices start to rise then they`d be continually saving towards an unobtainable goal (i.e. they save say ten grand deposit but prices go up and they suddenly need thirteen grand etc. etc.)

Having seen how prices have dropped over the last couple of years, although I`m no expert, I think this is probably the best opportunity they`ll have to buy a house for quite a while and the missus and I are willing to give them a helping hand.

They have a meeting with the mortgage advisor today so hopefully things will move on swiftly.

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Having seen how prices have dropped over the last couple of years, although I`m no expert, I think this is probably the best opportunity they`ll have to buy a house for quite a while...

Think about where prices are going, not where they've come from. This may be the best opportunity they've had for a while, but that doesn't mean it's the best opportunity they're going to have for a while.

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He`cs currently renting with his girlfriend so saving for a deposit as well (which they are doing) is a slow process. Our concern is that, by the time they`ve saved enough for the deposit and all the attached costs if house prices start to rise then they`d be continually saving towards an unobtainable goal (i.e. they save say ten grand deposit but prices go up and they suddenly need thirteen grand etc. etc.)

Having seen how prices have dropped over the last couple of years, although I`m no expert, I think this is probably the best opportunity they`ll have to buy a house for quite a while and the missus and I are willing to give them a helping hand.

They have a meeting with the mortgage advisor today so hopefully things will move on swiftly.

It is extremely unlikely that house prices will rise significantly in the next 5-10 years. Rising unemployment, very limited mortgage funding, the penalty for QE (aka higher interest rates) will see to that.

If you are trying to help them, then persuade them to rent for a couple of years.

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