Vendor paying towards the deposit

[raskel]

Hi, I was after some advice regarding a vendor paying the deposit on a house for a first time buyer. I am sure I heard about a scheme, which used to do this.

 

Obviously some of you are thinking, why would they do that? But rather than reducing the asking price of the house by 10-15k, would some vendors consider paying the deposit?

 

If so, how does this stand on the mortgage application and all the legalities associated with buying a house?

 

Any comments welcome, especially those in the field.

 

Thanks

[Leah-Lacie]

Its normally only 5% they pay, so most first time buyers still have to find the other 15%. If they reduced the asking price by 5% you would think the outcome would be the same though? I don't know why they do it!

 

 

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[Cyclone]

Because by not reducing the price it appears as if the house is actually 'worth' the full asking price and the purchaser gets a 95% mortgage instead of a 100% one for a lower value.

 

That being good of course since a 95% mortgage is available but a 100% one is not.

[raskel]

Thanks for your reply.

 

It just got me thinking really, as some houses are knocking 10.15k off the asking price in order to sell, so it seemed like a win win solution (if they have that kind of spare cash themselves)

[Jeffrey Shaw]

Because by not reducing the price it appears as if the house is actually 'worth' the full asking price and the purchaser gets a 95% mortgage instead of a 100% one for a lower value.

 

That being good of course since a 95% mortgage is available but a 100% one is not.

 

Thanks for your reply.

 

It just got me thinking really, as some houses are knocking 10.15k off the asking price in order to sell, so it seemed like a win win solution (if they have that kind of spare cash themselves)

If (as is typical) the payment (cashback/allowance/deposit) by V is wholly a sham, designed to defraud P's mortgagee M [lender] by showing an overt inflated purchase price but not the covert 'cashback'/'allowance'/'deposit paid', it's prohibited AND the solicitor acting for P or M or both is under a duty to report the fraud to M. Don't get involved- it may also lead to prosecution.

[raskel]

If (as is typical) the payment (cashback/allowance/deposit) by V is wholly a sham, designed to defraud P's mortgagee M [lender] by showing an overt inflated purchase price but not the covert 'cashback'/'allowance'/'deposit paid', it's prohibited AND the solicitor acting for P or M or both is under a duty to report the fraud to M. Don't get involved- it may also lead to prosecution.

 

Thanks, I will leave well alone of that then hehe.

 

An agent told me that there is a new 100% mortgage scheme available with conditions. Do you know anything about that?

[Dronfielder]

If (as is typical) the payment (cashback/allowance/deposit) by V is wholly a sham, designed to defraud P's mortgagee M [lender] by showing an overt inflated purchase price but not the covert 'cashback'/'allowance'/'deposit paid', it's prohibited AND the solicitor acting for P or M or both is under a duty to report the fraud to M. Don't get involved- it may also lead to prosecution.

 

Well said that man.