Is it really LTV Or is it actually Loan to Purchase Price

[chris.tarry85]

Theoretically speaking, if I were to buy a property for less than market value (with a credible, verifiable reason) would the mortgage be based on the value of the house or the price paid?

Theoretical Example:
House Value: 500k
Price Paid: 250k
Mortgage: 215k

Is the LTV here 43% or 86%?

[Jockman]

Value of property.

[ikarl]

as above, value of property.

I paid slightly over the home report value, but the LTV is based purely on the value of the property, not what I was willing to pay for it.

[chris.tarry85]

Thanks, I ideally want to avail myself of one of the mortgages limited to 60% LTV so even with some room in the property value this should be OK.

[Jockman]

You would still need to be mindful of any other security on the property from a 3rd party.

Your lender will be basing its offer on the amount of security available to it.

[chris.tarry85]

This would be the only finance secured on the property

[Sarnie]

chris.tarry85 said:

Theoretically speaking, if I were to buy a property for less than market value (with a credible, verifiable reason) would the mortgage be based on the value of the house or the price paid?

Theoretical Example:
House Value: 500k
Price Paid: 250k
Mortgage: 215k

Is the LTV here 43% or 86%?

This depends on the circumstances at play here. For example, if the vendor was your parents, they can Gift you Equity.....meaning that you buy it at £250k but the lender bases the LTV on the market value of the property rather than the lower purchase price.......but it can only be between family.........and not all lenders allow Gifted Equity, but it can be done......

[p1stonhead]

And IIRC Sarnie, stamp duty is based on the value not the puchase price? Otherwise it would be an easy way to avoid it?

[Jockman]

p1stonhead said:

And IIRC Sarnie, stamp duty is based on the value not the puchase price? Otherwise it would be an easy way to avoid it?

Seriously???

[p1stonhead]

Jockman said:

p1stonhead said:

And IIRC Sarnie, stamp duty is based on the value not the puchase price? Otherwise it would be an easy way to avoid it?

Seriously???

Well obviously not but I swear I read this somewhere yep you can consider that a stupid comment from me!

[Beetnik]

It depends on the value the mortgagor places on the property. For some it will be the lower of the valuation or the price paid. A valuation is an opinion, the price paid is a fact - and some consider this fixes the value in a way that a valuation does not.

As a buyer you also need to be mindful of the potential pitfalls of undertaking a 'transaction under value' - see http://www.ehlsolicitors.co.uk/involved-undervalue...

Edited by Beetnik on Wednesday 20th July 21:27

[Jockman]

p1stonhead said:

Jockman said:

p1stonhead said:

And IIRC Sarnie, stamp duty is based on the value not the puchase price? Otherwise it would be an easy way to avoid it?

Seriously???

Well obviously not but I swear I read this somewhere yep you can consider that a stupid comment from me!