Warning: Cannot modify header information - headers already sent by (output started at /home/leogdwul/public_html/financenet.org/wp-content/plugins/contact-form-with-captcha/cfwc-main.php:550) in /home/leogdwul/public_html/financenet.org/wp-includes/feed-rss2.php on line 8
Danny, Author at FinanceNet.org https://www.financenet.org/author/danny/ Tue, 02 Jun 2020 15:00:21 +0000 en-US hourly 1 https://wordpress.org/?v=6.4.4 Concessionary Purchase https://www.financenet.org/concessionary-purchase/ Tue, 02 Jun 2020 14:57:32 +0000 https://www.financenet.org/?p=2061

Concessionary Purchase Mortgages

The process of transfer of gift, or deed of gift, is a tough one in the property market. For example you may be gifting property to family members at a reduced price, which is a viable idea, and can benefit both participants involved in the exchange. Concessionary mortgages are often most beneficial to the person being gifted, even more so if they are a first time buyer, although you do not need to be a FTB to arrange this mortgage. There are a number of different transaction methods which are considered a concessionary mortgage, so it is important to know what the limitations are as well as the best way to go about arranging it.

Concessionary Mortgage Experts

If you want to buy a house which is sold at a lower price, you may be able to do this with a concessionary mortgage. These are sometimes known as Below Market Value, or BMV for short, or more frequently known as Gifted Equity. Below Market Value sales often occur between family members, however you are not limited to buying from relatives to obtain this mortgage. Other people include landlords, employers, property developers. It is also available regarding properties affected by section 106 legislation in regards to Key Workers.

Concessionary mortgages work by using the money saved (which is the difference between the asking price and what you paid), in place of or contributing to your deposit money. An example scenario: buying a house from a family member, which was up for sale at £150,000, however they will sell it to you at a 10% discount, providing you with £15,000 for your deposit.

How do you get gifted equity?

Most mortgage providers will require you to have a deposit which is at least 5-10% of the below market value selling price of which you are borrowing for. Some lenders will take 100% of the loan into account, regardless your application will need to meet all of their requirements.

It is important to seek out professional advice when trying to obtain gifted equity due to the requirements put in place by lenders in order to permit the purchase. Some terms deny the seller to remain living in the house following the purchase. For example if you bought the house from a family member, they would not be allowed to continue to live there. Sometimes there are tax complications which have requirements to be met also, so it is recommended to obtain independent legal advice.

Concessionary mortgages, or gifted equity, is not the same thing as gifted deposits. Gifted deposits is where the deposit is provided to you from someone out of the property chain and the property is sold at market value.

]]> Retirement Interest Only Mortgages https://www.financenet.org/retirement-interest-mortgages/ Wed, 04 Mar 2020 17:37:37 +0000 http://www.financenet.org/?p=1691 Retirement interest only mortgages or RIO as they’re sometimes known as, are simply interest only mortgages for the over 55’s but with a few differences. Like an Equity Release scheme, you borrow against the property but with an RIO you pay back the interest, not the loan, each month. You then have to pay back the loan against the property when you sell up, move into later life care or die. As always there are t’s & c’s but the standard one throughout, is that you have to pay back the interest over a definitive time frame. Whether that be an agreed amount of years or till you hit a specific age. Like many mortgages they come with restrictions, however it is designed to aid borrowers later on in life, and perhaps not in a financial position to get an ordinary residential mortgage.
If you needed a lump sum for any reason then you can withdraw this from the equity of your property; you might be helping your children get on the housing ladder themselves, paying for the trip of a life time or you need some work completed to your own property.
The great thing about RIO mortgages is that you don’t have to go through the painful task of proving your whole income/pension and have a full assessment you will have to detail that you can have the funds to make the payments. Some of the RIO schemes do let you pay off capital (plus the interest), thus reducing your loan so more of your estate can be passed to those that you want to leave it to.
All lenders have slightly different requirements on how much you can draw against your property, so it is worth getting an advisor to view your options and guide you to the right place. More and more lenders are reviewing their current deals as they have acknowledged that the current later life lending market needs, are not being met. People are living longer, so the products they currently have in place need updating. There are currently over 15 products available.
As a general rule of thumb if you want to borrow on an interest only basis you will be able to borrow less. Whereas if you wanted a larger sum to be drawn down against your property then you would have to look at a capital repayment. This will all also be down to the value of the property, if you meet the minimum income and minimum loan size. This financial assessment is small in comparison to a regular mortgage but all lenders under FCA guidelines will have to slightly review your income and outgoings to check you can keep up with the payments, as usually the only source of income is either a pension, savings or investments and not in employment.
RIO are somtimes better for you and for your loved ones who will be inheriting your property, as with Equity Release there will be much less equity in your assets.
If you are considering doing anything with your property, please do seek advice from a qualified financial advisor.

]]>