Specialists in Concessionary Purchase mortgages
A concessionary mortgage can be used to buy property that is sold at a reduced price. It is often referred to as a ‘BMV’ (below market value), or, more commonly, Gifted Equity. You can buy a property at BMV from a selection of people. Most common is a family member but you can also purchase at a discount via a landlord, your employers, a developer, or a property subject to section 106 legislation which covers Key Workers for instance
The way that concessionary mortgages work is that the discounted amount acts as/or towards your deposit. For example; you are considering buying your Grandparents property from them, which has an open market value of £100,000. However, you have no deposit and nothing to contribute to the pot, but your grandparents have very kindly agreed to let you buy the property from them for £80,000. With the right lender, it is conceivable that the Gifted Equity (discount) of £20,000 would act as your deposit, and so 100% of the £80,000 could be considered for mortgage purposes subject to affordability.
How can you get a Concessionary Purchase mortgage?
As suggested above, lender criteria vary and some would like you to have at least a 5-10% deposit and some will consider 100% of the loan but in any event your application has to meet all of the lenders criteria as a whole.
Seeking the right advice is essential when making a concessionary purchase as lenders will have terms and conditions to be met to allow the purchase to take place. For example, lenders will not normally permit the donor of the property to continue to reside in it and so it may not be possible to purchase the property in the example above and allow the Grandparents to remain in it. There may also be issues with regard to taxation and so it is advisable to seek the right advice in this regard too. Independent legal advice is also advisable, so that each party understands their responsibilities.
Do not confuse Gifted Equity (concessionary mortgage) with Gifted Deposits. They are very different scenarios and a gifted deposit simply allows a third party to gift you the deposit for purchase purposes at full market value.
Tax treatment varies according to individual circumstances and is subject to change.
If wish to speak to us about a Concessionary Purchase mortgage please call 0330 094 5476 or send us a message and we’ll be in touch as soon as possible.