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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.
See our complete guide to stamp duty to find out how much your bill will be and whether you qualify for exemption.
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.
