loan as deposit?

I think it is to catch out those transactions where the deposit is paid by the vendor together with those old fashioned type of 'top up' mortgages that you used to be able to get, and also new personal loans taken out contemporaneously with the mortgage.

I see no problem with the 'boat loan' idea so long as its existence is declared on the mortgage application.

Reply to
john boyle
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In message , Doug Ramage writes

So I wasn't hallucinating myself then either!

(Should there be a 'no' before 'uncertain')

Reply to
john boyle

In message , D.A.L. writes

Its existence isnt a problem though is it?

Reply to
john boyle

Presumably you meant "... in no uncertain terms ...", or were they really uncertain about it? :-)

Reply to
usenet

Well, to mis-quote Secretary Rumsfeld.........."There certain certains, and certain uncertains.........." :)

Reply to
Doug Ramage

Ah, yes, that well-known scam where the price of the house is X, and they pretend it's really X+Y, with Y being a "deposit" (but from a dubious source), just so the LTV is based on V of X+Y, especially when the Y is big enough for L to be X.

Used to?

So you could afford to pay the MIG and the broker's fees, right?

Reply to
Ronald Raygun

"Ronald Raygun" wrote

Why do you call it a "scam"?

If the house is (legitimately) valued - by a competent surveyor - at X+Y, then where is the "scam"? If the surveyor instead values the house at only X, then the mortgage will (of course) be based on only X - so there is no advantage at all to "pretending" the sale amount is over X.

Obviously, the vendor would only consider selling at amount "Y below true value" (or in other words, they'd only pay the deposit of Y themselves!) if the house has been on the market already for a long time, and (s)he needs the loot very quickly. Selling at below-value is his/her choice.

Reply to
Tim

Top-ups and personal loans could be used to avoid the MIGs.

Reply to
Doug Ramage

"Ronald Raygun" wrote

Why do you call it a "scam"?

If the house is (legitimately) valued - by a competent surveyor - at X+Y, then where is the "scam"? If the surveyor instead values the house at only X, then the mortgage will (of course) be based on only X - so there is no advantage at all to "pretending" the sale amount is over X.

Obviously, the vendor would only consider selling at amount "Y below true value" (or in other words, they'd only pay the deposit of Y themselves!) if the house has been on the market already for a long time, and (s)he needs the loot very quickly. Selling at below-value is his/her choice.

Reply to
Tim

Mortgage loans are usually based on the lower of valuation and purchase price. So if the house is legitimately valued at X+Y (or even X+Y+Z), yet the seller is only getting X, then the lender is being hoodwinked if being pretended to that the selling price is X+Y.

Indeed, but then the true value isn't X+Y, it's X.

All that apart, the very concept of deposits is anathema. There is only one price, and every penny of it should be paid on completion, and not before. That's one thing the Scottish system has right.

Reply to
Ronald Raygun

I'm getting a sense of deja vu about this.

Reply to
Ronald Raygun

"Ronald Raygun" wrote

I know that is often true, but it is a very strange state of affairs (see below).

"Ronald Raygun" wrote

If someone pays X for a house valued (legitimately, competent etc) at X+Y (let's say for cash, but there could be a mortgage initially as well), and then the week after purchase gets a new mortgage - then the maximum mortgage loan is based solely on valuation. "Purchase price" does not come into the equation when the house is *already owned*.

So, why the "lower of valuation or purchase price" when the full max LTV% of

*valuation* can be obtained from another mortgage lender immediately after purchase??
Reply to
Tim

"Ronald Raygun" wrote

Darn server didn't show up the first post, thought it had been "lost" !!

Reply to
Tim

you really seem quite convinced of this.

put simply, you don't have to convince me or any of the others, if you are so certain just try it.

but please, oh please, let us know the outcome..

:-)

Reply to
John :-)

Not really.

If someone pays £X, then that's the value, and the valuation, no matter how "legitimate", was in fact inaccurate.

Indeed.

True, but...

The full max LTV when remortgaging tends not to be as high as the full max LTV when purchasing.

Reply to
Ronald Raygun

"Ronald Raygun" wrote

You cannot be serious! Different sellers will have different requirements when selling; just because the person who happens to currently own a large

12 bedroomed detached mansion in the middle of London, would sell at only 100,000 (because they are in dire need of the money) - does *not* mean that the mansion is only worth that much!

The problem a vendor in this position may have, is that people who could afford a reasonably full value for the house, may not come along very often. The vendor needs 100,000 cash much more than the house, even though the house would easily sell (given enough time to find a buyer) for much, much, much more than that.

You may say that the *immediate* value of the house is only 100,000 (because there are no other buyers around at the moment) - but then if you go down this route, then you could also say that the value of *every* single house in the country is really *Nil* at this present minute - simply because *no-one* will push through a house purchase in less than 10 minutes!

Reply to
Tim

Of course I can.

That's a different situation. In the case at hand we have a willing buyer and a willing seller, neither under more than the usual pressure.

The *actual* value of the house is £X because that's what they have agreed. Dressing £X up as £X+£Y-£Y, and then hiding the -£Y discount while presenting the £X+£Y to the lender, is just being naughty.

Well, at least there'll be stamp duty to pay on the ficticious £Y!

Reply to
Ronald Raygun

"Ronald Raygun" wrote

AIUI, there are some lenders that are happy with this scenario - altho' they'll usually want to know about both figures, X and X+Y ! I believe they call it something like a "gifted deposit"(?) ...

Reply to
Tim

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