Owning your own home

They don't look at the value, they look at the purchase price, most of the time.

The times when they don't are when you are buying from family as a family gifted deposit purchase or when buying from landlord or council right to buy.

Commercial properties or renovations and self builds have slightly different rules, for mainstream residential, most lenders will go by the above rules.

If you are buying under value and not getting a gifted deposit, then Getting the property cheaper doesn't matter, though some lenders will refuse if they decide that it is a 'distressed' sale.

Stupid Stamp duty... there goes another 5k...

https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property#ex3

If you transfer or divide up jointly-owned property or land: unmarried couples and other joint owners

You don’t pay SDLT if 2 or more people jointly own property (as joint tenants or tenants in common) and you divide it physically and equally and own each part separately. But, if one person takes a bigger share, or all of the other’s share, and pays cash or some other consideration in exchange, you must tell HMRC. If the amount you pay is more than the current threshold, you’ll pay SDLT on it, see example 4.

Transfer the outstanding mortgage

Joint owners (this may include unmarried couples who are splitting up) may agree that just one of them will take over ownership of a property they bought together, including any outstanding mortgage.

In this case the person taking ownership will pay SDLT on the total chargeable consideration of the following (either or both), if it exceeds the SDLT threshold:
•any cash payment that one of the couple makes to the other for their share
•the proportion of the outstanding mortgage that belongs to the share of the property being transferred

Example 3

A couple own a house equally together and:
•it’s valued at £400,000
•they’ve equity in the property of £300,000
•they’ve an outstanding mortgage of £100,000

They transfer ownership so that one of them will have sole ownership of the property. The new sole owner:
•pays cash for half of the equity - £150,000
•becomes responsible for the other person’s half of the outstanding mortgage - £50,000

The consideration for SDLT is £200,000, made up of the:
•cash payment
•50% share of the outstanding mortgage

The new sole owner pays £1,500 SDLT (0% of £125,000 + 2% of £75,000) and must tell HMRC by filling in an SDLT return.

would banks be shitty about that from a mortgage perspective?

HMRC might, from a stamp duty perspective.

https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property

"
If you get property as a gift you won’t pay SDLT as long as there’s no outstanding mortgage on it. But if you take over some or all of an existing mortgage, you’ll pay SDLT if the value of the mortgage is over the SDLT threshold.
"

Buying something for less than market value would be considered a partial gift, but the same rules apply (as I understand it).

If there's no mortgage on the property (with the existing owners) and you buy it for £240k then you'll pay stamp duty on that £240k = £2300 and not the £300k market value.

If there's a mortgage with £260k outstanding on the property and you buy it for £240k then you'll pay stamp duty on £260k = £3000, etc.

The gift aspect could become a potential problem with IHT too.

[EDIT] Outdone by TW ninja-edit.

not just winging it on what someone on the internet said

Next up - medical advice and child rearing tips.

OH! silly me - I was taking the total SDLT and halving it, not halving it first then applying SDLT... woo.

£500 stamp duty then - not £5000.

And the small matter of my commission...

Or £1,500.

Because maths.

:)

unfortunately the small matter of £100-150k still seems to be a significant obstacle between me and my home...

(1st world problems, I know)

Finding out people you know are buying, doing up, and turning profits on houses as their business. And feeling slightly jealous.

Urgh

Stick with @TW, he just saved you 4.5k in seconds, house will be free by midnight

Assuming that the value stacks up, that's completely correct. With the new loan to value, you could be looking at 2 year fixed rates down to around 1.6% or so subject to your other circumstances, so a massive difference in rate and payments.

You could save on stamp duty by getting married, then annulling the marriage after the transfer is complete...

They look at the value and the purchase price. You need to declare if you are paying below mkt value and explain the reason (unless you are doing fraud), but then the ltv should be based on resale value not transaction price.

For this kind of purchase a broker should be used as the purchase will not fit the profile of a standard retail mortgage.

We could....
(the ex's mother would never forgive either of us, but especially me... )
(but also, seeing as we've never got married in many many years, £3.5k isn't really going to sway it)

You could save on stamp duty by getting married

You can save on IHT by doing similar.

Assuming one parent has died:-

• Remaining parent marries partner of child.
  
• Parent dies and child's partner inherits everything as spouse (assuming the will is properly drawn up)
  
• Child then free to marry partner.
  
  

Or something like that...

LTVs are almost always based on the transaction/purchase price.
Otherwise there would be loads of people buying with 100% mortgages and 110% mortgages, with developers offering properties under market value to offer them to people with no deposit...

Seems expensive. I'm in Leyton and have had good results through Mybuilder. Sign up and choose people with good feedback. To screed that size room might not be that tricky, so you could try that?

Although that does effectively happen through incentives offers by developers to enhance buyers ltv.

Rarely does it enhance buyers LTV. Deposit contributions are rare, as the help to buy equity scheme has taken over, and you need to put in your own contribution regardless.

Incentives such as stamp duty paid, free maintenance charge, upgrades to flooring, kitchens etc, don't enhance LTV, and as all incentives need to be disclosed via the solicitors in a CML (council of mortgage lenders) form, this can actually have a negative impact on LTV, the lenders may deduct the incentive value from the purchase price and use this as their 'true value', effectively increasing the amount of deposit that you need.

Mortgage lending is not as easy anymore, no self cert, no raising home improvement funds based on the end value LTV, lower salary multiples, less house builder trickery, second property stamp duty, new rules on 'consumer BTLs' if your keeping your main residential and letting it out, and house prices increasing, its not fun.

At least rates are silly cheap!

People have been doing it badly for years...

Anyone know a man with a van in East (Hackney)?

Sadly but not completely unexpectedly the adjoining neighbour of our semi passed away last week. We've only owned the house for a couple of months but are on good speaking terms with the owners three sons. We were just about to serve a party wall agreement for a modest ground floor extension which they were all happy for us to undertake but now we're not sure who has the legal authority to sign it, all the beneficiaries from the will?

They are also looking to sell as soon as possible, even with probate to deal with and my fear is that they won't want to deal with us in case it impacts the sale.

Any advice while I wait for our soliciter to get back from the fucking golf in Augusta?

I'll have it. How much do they want?

Offer accepted. Currently feel like I'm dreaming.