Hi All,
Was wondering whether any of you had come across this before? I know it is totally above board, so does anyone know why the solcitor acting on behalf of the vendor would object to it and call it mortgage fraud?
Thanks,
Geordie
because it is (if you mean what I think you mean)
tim
How is it fraud when several mortgage lenders accept vendors deposits?
To clarify the situation I have agreed to purchase a house with a 5% vendor deoposit paid - I don't have the funds saved up for a deposit so that is fine. I already have my mortgage offer in place so where is the problem and why do you consider it so untoward?
Geordie
What is the vendor selling it for ?
What does the vendees mortgage company value it at ?
Daytona
Do they? (they might do from developers because these 'cashback's are open, but they won't if they are a hidden part of a private sale)
Because it's a semantic trick designed to mislead.
Buying a house for 100K with the vendor giving you
5K back as a deposit, is not you buying a 100K house. It's you buying a 95K house.If you now tell the BS that you are paying 100K for the house, you are lying and if you lie on your mortgage application, that is a fraud.
Whether anybody does anything about it is another matter (I personally couldn't give a fig if someone does)
tim
Let's turn that percentage into sample numbers. Suppose your 5% vendor deposit means that the house was marketed at £200k and the
5% vendor deposit means he is really giving you a £10k discount, i.e. you have to find only £190k, all of which you are hoping to borrow from your mortgage lender.You will then declare to the lender that you are seeking a 95% mortgage on a £200k house. This is fraud because what you're really after is a 100% mortgage on a £190k house.
... not to mention the stamp duty difference. Why not just agree to pay
190k for the house and save yourself 100 in Stamp Duty....
Naahh.
It would only be fraud if the mortgage applicant lied on the application form. Most mortgage application forms ask a question about vendor deposits and/or cashback deals so they would need to lie when answering that question.
The solicitors instructions from the mortgagee will also likely ask if there is any dodgy dealing going on regarding the 'sale' price, and if there is then it still wouldnt be fraud by the mortgagor, but the mortgage offer might be withdrawn.
Finally, the valuer would also express an opinion on the value of the property and his enquiries should reveal a public offer of a 'deposit paid' situation.
In message , Daytona writes
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