Buying a property means getting your hands on the years of deposits that you must have saved. Here comes the positive aspect of concessionary purchase, which will give you some peace of mind. Let us look into this topic more to understand what it is all about.
When you have a property of your parents that you are lucky enough to get a chance to buy, then there is an excellent way to get this done without you needing to spend all your deposit. A concessionary purchase is something that can allow you to buy your mum and dad’s property at a value lesser than the market value. It is also named a transaction done under the value.
Getting a mortgage for a concessionary purchase is feasible. You can take the help of Mortgage experts online who can guide you with the entire process. You just need to fill up the online form and send your details to them.
How this is going to work?
For example, if you have a property of your parents which is around £ 200000 and that is something you are ready to buy. Though you can repay the mortgage amount, the deposit here that needs to be paid is around 10% of the property amount, which comes to £ 20000. If you cannot afford to spend this, then your parents can help you by lowering the selling price to £ 150000. So, whatever the difference amount between the selling price and the market value of the property will be the amount to be paid as a deposit. All you need to do is to find a lender who can grant you this mortgage of £ 150000.
Who are those relatives who can offer you this concessionary purchase?
The relatives who can offer you concessionary purchases include your brother, sister, parents and grandparents. Some of the lenders even consider granting this to people who have been offered their property by uncles, aunts, step-parents or even cousins. In this case, then you might have to pay about 5 to 10% of the total property amount as a mortgage deposit. This cannot be given by any of the relatives.
What are the pros and cons of using this facility?
Pros
- As a parent, you can pass on your property to your kid at an affordable price
- You will get to keep the property within the family itself
- As a purchaser, you will get the property at a lower rate than the market value. Other than this you can get a mortgage at a good concessionary value.
Cons
- You will have to inform your mortgage lender that the property is bought at a lower rate. Failing this the mortgage offer is rescinded
- This might affect the inherent tax purpose
- This can turn into a void transaction if the party who is gifting you the property is made bankrupt.
As most lenders expect the seller to move out of the property once the transaction is completed. However, many even agree to it only at the point that you do not build an annexe to make them stay. In such cases, a mortgage broker is the only one who can help you get to the right mortgage lender.
