How To Get A Mortgage From A Concessionary Purchase?
A concessionary purchase can be defined as a property bought from the family, usually from parents, for less than the property’s current market value. It is commonly known as a ‘Below Market Value (BMV)’ or ‘Gifted Equity’.
How Does It Work And Who Can Sell?
After the property is purchased, it is sold at a discounted rate. It makes the property cheaper for the buyer. It is usually seen as a gift. Many mortgage lenders’ operations only allow family members like the parents, brothers, and sisters to sell, while a few also allow distant relatives like uncles, aunts, cousins, and step-parents.
Purchase from a landlord is also possible when you have been living as a tenant for more than a year. Here, the difference between market value and purchase price acts as a deposit, provided you select the right mortgage lender.
What Is A Concessionary Purchase Mortgage?
We know what a concessionary purchase is. The mortgages used to buy properties at rates below market value are known as mortgage for a concessionary purchase.
How To Get A Mortgage on Concessionary Purchase?
The process of getting a concessionary purchase mortgage is no different from any standard mortgage application. The only difference here is you can expect the lender to place extra scrutiny around the property’s market value. Seeking the right advice is of prime importance while purchasing the concessionary purchase since the lenders will have terms and conditions to be met to allow the purchase to take place. Several issues arise during his process. For example, the lenders may not permit the donor of the property to continue to reside in it and so it may not be possible to purchase the property; there may be issues concerning taxation; it is also advisable to seek independent legal advice so that each party understands their responsibilities.
Factors that affect your eligibility are:
- Listed buildings are sometimes seen as a risk factor by lenders because it is difficult to sell in cases of repossession.
- A standard mortgage term is 25 years which makes some lenders hesitant to provide a mortgage to elderly applicants, and borrowers wanting a mortgage over a shorter period will need to prove affordability.
- Your income can make a huge difference. Lenders might want to know how much you earn to be confident that you will repay your loans.
If you are planning to apply for a Concessionary mortgage, the following steps can be helpful:
- It is necessary to make sure that both you and the seller understands below-market-value mortgages. This kind of mortgage requires the seller to discount the selling price so that the buyer can afford it.
- It is a huge financial gift, and both parties should understand the terms and conditions before proceeding any further.
- It is vital that you know your credit history and understand what lenders will see when assessing your application.
Concessionary purchase mortgages can be tricky. Connect with us today, and let us help you find the best solutions for your problems.