Mortgage advice please! Buying family out of a property

[Matt99man]

Ok so say if someone owns 10% of a property and the rest of their family owns the other 90% how would buying the 90% work? As far as I understand you would still need a deposit to buy the 90% as effectively that would be a non existent 100% mortgage even though you own a small amount? Is that correct?

[Sarnie]

Is the property mortgaged?

If it's not then you would remortgage the property, removing said family from the mortgage and deeds in the process, up to 90% of the properties value to pay off the family. Your 10% remains in the property as the deposit.

[Matt99man]

Thanks sarnie, I though that should be the case. Looks like our mortgage people do not know what they are talking about! How would it work I the property was bought undervalue? Better rate?

[Sarnie]

Matt99man said:

Thanks sarnie, I though that should be the case. Looks like our mortgage people do not know what they are talking about! How would it work I the property was bought undervalue? Better rate?

I'm not sure what you mean?

Haven't you already bought the property? Or are you referring to the fact that when you bought the property, it was bought undervalue?

[Magog]

I think you need to be very careful about buying 'undervalue'. Depending on the circumstances HMRC will take a very dim view of it with regards to any effect it will have on Capital Gains and/or Inheritance tax payments due, as well as Stamp Duty. I'm sure there are many other implications as well that someone more knowledgeable than myself will be able to point out.

[Matt99man]

Sarnie said:

I'm not sure what you mean?

Haven't you already bought the property? Or are you referring to the fact that when you bought the property, it was bought undervalue?

The house is owned outright, what I meant was if the house was bought for say 200k when it's valued more, would that get a better mortgage deal?

[Sarnie]

Matt99man said:

The house is owned outright, what I meant was if the house was bought for say 200k when it's valued more, would that get a better mortgage deal?

No.

The value of the property, for mortgage purposes, is either the purchase price or the market value; whichever is lower. It's this figure that you would be able to borrow 90% of.

[Matt99man]

Sarnie said:

No.

The value of the property, for mortgage purposes, is either the purchase price or the market value; whichever is lower. It's this figure that you would be able to borrow 90% of.

Thanks again Sarnie