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Buying parents house - Deposit required?

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  • 05-03-2011 1:59am
    #1
    deisedevil
    Registered Users Posts: 3,252 ✭✭✭


    Have a friend who's thinking of buying a house his parents own. Which is a second house that they have.

    We have searched for answers to our questions but not to much success.

    If his parents are willing to sell it to him at whatever would be the current value or maybe less but he has no deposit to get a mortgage is there anything he can do in this type of situation?

    Would he still need a deposit to get a mortgage on a house his parents own and who would basically be willing to put up the deposit based on the sale of the house (or something like that)?

    I'm probably not explaining this right but if anyone understands what I mean and have any info on how he might do this please let me know. Thanks.


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    #2
    Victor
    Registered Users Posts: 78,392 ✭✭✭✭Victor


    The banks want to put (financial) distance between the mortgage and the current valuation for two reasons (a) it makes the buyer more responsible for issues, e.g. it discourages overpaying for a property (b) having a deposit demonstrates some financial astuteness, primarily the ability to save.

    In the situation you describe, the bank are only really likely to offer a mortgage if either (a) the buyer pays part of the amount in cash or (b) the parents sell for less than the current valuation (this may have tax implications and a solicitor should be asked for advice, however the transaction may be CGT/CAT exempt given the relationship).

    Of course, there is difficulties establishing the current valuation in the present market conditions.

    Best to talk to bank and see what their opinions are.


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    #3
    deisedevil
    Registered Users Posts: 3,252 ✭✭✭deisedevil


    Victor wrote: »
    The banks want to put (financial) distance between the mortgage and the current valuation for two reasons (a) it makes the buyer more responsible for issues, e.g. it discourages overpaying for a property (b) having a deposit demonstrates some financial astuteness, primarily the ability to save.

    In the situation you describe, the bank are only really likely to offer a mortgage if either (a) the buyer pays part of the amount in cash or (b) the parents sell for less than the current valuation (this may have tax implications and a solicitor should be asked for advice, however the transaction may be CGT/CAT exempt given the relationship).

    Of course, there is difficulties establishing the current valuation in the present market conditions.

    Best to talk to bank and see what their opinions are.

    Thanks very much for the detailed answer.


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