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Bob Loblaw

Deposit Question

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I posed this question yesterday but posted it in the off-topic section by accident.

Was having a discussion with a friend who lives in a rented house. House is about two years old and was sold originally for £387,000. Bank repossessed the property and they have now suggested they would accept £200,000 for it. Friend is going to ask that the bank sell it to him for £250,000, but knock off £50,0000 as a deposit and so get a better mortgage deal at 80% LTV (he says he has a deposit but only around 5%).

Does this sound feasible? Would the mortgage company want proof of the £50,000 'deposit'? I know deals like this went through at the peak of the market on new builds but somehow it just does not sound right. Friend is adamant this is possible, but if so why do more people not do this?

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I posed this question yesterday but posted it in the off-topic section by accident.

Was having a discussion with a friend who lives in a rented house. House is about two years old and was sold originally for £387,000. Bank repossessed the property and they have now suggested they would accept £200,000 for it. Friend is going to ask that the bank sell it to him for £250,000, but knock off £50,0000 as a deposit and so get a better mortgage deal at 80% LTV (he says he has a deposit but only around 5%).

Does this sound feasible? Would the mortgage company want proof of the £50,000 'deposit'? I know deals like this went through at the peak of the market on new builds but somehow it just does not sound right. Friend is adamant this is possible, but if so why do more people not do this?

:blink:

Where do mortgages come from?

Next Question,

Are the banks really going to con themselves to offer your friend a lower interest rate?

Is this legal?

CALLING ERIC!!!

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I posed this question yesterday but posted it in the off-topic section by accident.

Was having a discussion with a friend who lives in a rented house. House is about two years old and was sold originally for £387,000. Bank repossessed the property and they have now suggested they would accept £200,000 for it. Friend is going to ask that the bank sell it to him for £250,000, but knock off £50,0000 as a deposit and so get a better mortgage deal at 80% LTV (he says he has a deposit but only around 5%).

Does this sound feasible? Would the mortgage company want proof of the £50,000 'deposit'? I know deals like this went through at the peak of the market on new builds but somehow it just does not sound right. Friend is adamant this is possible, but if so why do more people not do this?

So your friend is a wannabe-fraudster. I thought the banks were supposed to be less keen on that than they were a couple of years ago, but who knows? Let us know if he gets away from it: then we'll know the bubble's back and heading for another round of bust banks.

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I posed this question yesterday but posted it in the off-topic section by accident.

Was having a discussion with a friend who lives in a rented house. House is about two years old and was sold originally for £387,000. Bank repossessed the property and they have now suggested they would accept £200,000 for it. Friend is going to ask that the bank sell it to him for £250,000, but knock off £50,0000 as a deposit and so get a better mortgage deal at 80% LTV (he says he has a deposit but only around 5%).

Does this sound feasible? Would the mortgage company want proof of the £50,000 'deposit'? I know deals like this went through at the peak of the market on new builds but somehow it just does not sound right. Friend is adamant this is possible, but if so why do more people not do this?

This was possible if you were buying from a developer, with the assistance of some dubious professionals: accountant / lawyer / mortgage broker etc. It is what Ahuja does innit?

I can't see the banks getting involved though.

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The banks are now aware of this scam. They will want to see the paperwork and ask questions about the deposit.

It was common for building companies to pay a "deposit" or other incentives. When we looked at buying a newbuild once (years ago and no, we didn't) we were offered a scheme like that. Both the HSBC and Natwest would take off any incentives and take the lesser figure as the "real" sold price. Then they would calculate on that.

The Land registry is sadly full of new build flats with the sold price as the inflated one. We checked up on some flats after they were sold and they had been registered as the higher price, even when the LR showed a mortgage. So some banks didn't check well enough or the building took part in a blatant fraud.

Sadly, this helped inflate the prices.

Edited by Flopsy

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