Mortgage and Rent to Buy
Discussion
I dealt with Martin Stewart at Cheltenham branch - if we're quoting, then from his email to me;
'We could lend on standard terms based on deposit, so def at 90% LTV and probably at 85% if he can provide proof from the developer that he is receiving the 5% deposit as a gift (IE they don't want it back!)'
'We could lend on standard terms based on deposit, so def at 90% LTV and probably at 85% if he can provide proof from the developer that he is receiving the 5% deposit as a gift (IE they don't want it back!)'
hamski said:
I dealt with Martin Stewart at Cheltenham branch - if we're quoting, then from his email to me;
'We could lend on standard terms based on deposit, so def at 90% LTV and probably at 85% if he can provide proof from the developer that he is receiving the 5% deposit as a gift (IE they don't want it back!)'
In what way does that evidence that someone can rent a property for a duration of time and then use said rent as deposit when they come to purchase the property?'We could lend on standard terms based on deposit, so def at 90% LTV and probably at 85% if he can provide proof from the developer that he is receiving the 5% deposit as a gift (IE they don't want it back!)'
Sarnie said:
In what way does that evidence that someone can rent a property for a duration of time and then use said rent as deposit when they come to purchase the property?
As I mentioned previously, this would be classed as a Vendor Gifted Deposit and most lenders have either removed this option from their criteria or limit it to 5% of the purchase price.
I've spoken to Martin and he remembers the case (and that it eventually got declined) and is checking their lending criteria again with regards to Vendor Gifted Deposits and is going to mail me later today...
As I mentioned previously, this would be classed as a Vendor Gifted Deposit and most lenders have either removed this option from their criteria or limit it to 5% of the purchase price.
I've spoken to Martin and he remembers the case (and that it eventually got declined) and is checking their lending criteria again with regards to Vendor Gifted Deposits and is going to mail me later today...
hamski said:
What has this turned into? I extracted a bit of email to protect names etc. I specifically asked about a rent to buy scheme where the rent is repaid as a deposit. If you want the full conversation and all the emails pm me. But don't try disrespecting me over a forum please
Who is disrespecting you?People are asking the questions that only you seem to know the answers to. I've tried to find the answers myself as it would be useful information to know, as there is a niche for it if a lender will do it, as per the response to this thread.
That's all.
Dino D said:
Scenario: property worth 500k (market valuation from surveyor).
Tenant paying 1,500 rent pm.
Tenant proposes to buy property for 520k by paying as follows:
15k down now.
1,500pm 'rent' over 5yrs (to be deducted from sale price) = 90k.
After 5yrs 415k remains to be paid.
Tenant proposes to get mortgage for that balance.
This doesn't make much sense. as others have pointed out, if £1,500 per month is the fair cost to live in the house with no further obligations on each side, then why are you going to start reducing the price of the house when it's sold later? Rent paid is not savings for him, it's payment for use of your house. If you want to sell it in five years, why not keep renting it out for five years, and then sell it in five years for the market value?Tenant paying 1,500 rent pm.
Tenant proposes to buy property for 520k by paying as follows:
15k down now.
1,500pm 'rent' over 5yrs (to be deducted from sale price) = 90k.
After 5yrs 415k remains to be paid.
Tenant proposes to get mortgage for that balance.
Do you really think that it'll on;ly be worth £430,000 by then?
Another way to look at this is that you are neglecting the tiime value of your money. Ignoring the (small) effect of getting the deposit today, you could sell it upfront for £500,000, put that money in a 5 year bond at 4.6%, and have £615,000 in your hand at the end, without any headaches inbetween.
You'd lose out on the rent, of course, but that's still massively better than your idea.
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