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Family and Relative Connected Purchases.

This type of purchase is where a family member (parent/grand-parent/Uncle /Aunt Etc...) is selling a property they own and are selling to a relative at below market value. For example a parent is selling a property they own with a recognised market value of £200,000 to their son or daughter for a price of £150,000 as a family concession. In this example the mortgage applicant being the son or daughter would NOT need any deposit as SOME mortgage lenders will accept the value in the property being “gifted” to the son or daughter to calculate the overall Loan to Value.

The son or daughter will also be able to obtain a 75%LTV product from the mortgage lender so not only do they not have to have any deposit but they will also be able to obtain a 75% LTV mortgage product which qualifies them for a lower mortgage rate than a 90%LTV product. Furthermore in this example the concessionary price paid of £150,000 can also be registered on the Land Registry at £150,000 which would avoid the mortgage applicant incurring Stamp Duty – this type of transaction is NOT available from all mortgage lenders. We would recommend that you seek Independent Mortgage Advice on this topic. Please contact us to discuss this in more detail.

For this type of purchase the lender will insist on carrying out their own valuation (usually the survey fee is charged to the applicant) to establish the true “market value” and will use the valuation recommended by their own surveyor as the purchase price.

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