Head of Content
Mortgage Advisor & Director
Can you get a mortgage to buy a house below market value?
Yes. Lenders are generally willing to provide a mortgage for houses priced below market value.
For those buying a property from a relative which is the most common reason for buying below market value, lenders will examine your application carefully. Your lender will be looking to compare the purchase price against local market value by checking similar properties sold in the area.
There are several reasons why a house might be priced below market value:
- Sales between family members
- The vendor requires a quick sale
- The vendor is in financial difficulty
- The property is being auctioned
Buying a house below market value from a family member
For a house sale between family members, this would likely be classed as a concessionary purchase.
If the house is priced below market value, some lenders may accept the difference between the market value and the sale price in lieu of a deposit. For example, if you were looking to buy a house from a relative for £200,000 but the market value is £250,000, this would leave £50,000 equity creating a Loan to Value ratio of 80%. In this scenario, you would not be contributing any cash deposit to secure the mortgage. These types of mortgages are typically only acceptable between immediate family members.
There may also be tax implications to consider when buying a house from a family member, for example, Inheritance Tax or Capital Gains Tax.
As a specialist mortgage product, we would recommend you use an experienced broker to ensure you are getting the best deal.
Will I have to pay Stamp Duty?
As the buyer of a property, you are responsible for paying any Stamp Duty Land Tax that is incurred by the purchase.
The amount of stamp duty you'll pay depends on the value of the property, whether it is your only property, and whether or not you are a first-time buyer.
In September 2022, changes were announced to the way in which Stamp Duty is calculated. These changes will mean that, for most people, the amount of Stamp Duty they pay will be lower than it would have been under the old rules.
The tables below show the new rates of Stamp Duty:
Stamp duty in England and Northern Ireland (from September 2022)
|
Portion of Property Price |
Tax Rate (Primary residence) |
Tax Rate (Additional Property) |
|---|---|---|
|
Up to £250,000 |
0% |
3% |
|
Between £250,001 to £925,000 |
5% |
8% |
|
Between £925,001 to £1.5 million |
10% |
13% |
|
More than £1.5 million |
12% |
15% |
First Time Buyer Stamp duty in England and Northern Ireland (from September 2022)
|
Portion of Property Price |
Tax Rate (Primary residence) |
|---|---|
|
Up to £425,000 |
0% |
|
Between £425,000 to £625,000 |
5% |
|
More than £625,000 |
If the price is over £625,000, you cannot claim the relief. |
Stamp duty in Wales (from 10th October 2022)
|
(Unlike England, Wales has no special threshold for first-time buyers.) |
||
|---|---|---|
|
Portion of Property Price |
Tax Rate (primary residence) |
Tax Rate (Additional property) |
|
Up to £225,000 |
0% |
4% |
|
Between £225,000 to £400,000 |
6% |
10% |
|
Between £400,000 to £750,000 |
7.5% |
11.5% |
|
Between £750,000 to £1.5 million |
10% |
14% |
|
More than £1.5 million |
12% |
16% |
Stamp duty in Scotland
|
Portion of Property Price |
Tax Rate (primary residence) |
Tax Rate (Additional Property) |
|---|---|---|
|
Up to £145,000 (£175,000 for first-time buyers) |
0% |
4% |
|
Between £145,000 to £250,000 |
2% |
6% |
|
Between £250,001 to £325,000 |
5% |
9% |
| £325,001 to £750,000 |
10% |
14% |
| Over £750,000 |
12% |
16% |
How can I learn more?
At Teito, our team of experts have helped many people like you to get the best deal possible on their new mortgage. We are a whole of market broker, which means we have access to thousands of mortgages from over 90 lenders, including those who are amenable to lending on houses bought under market value.
If you're ready to get started, complete our simple online form today and we promise to make your mortgage journey as straightforward and stress-free as possible.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
