Borrowing above the purchase price on a property is only allowed in certain instances and restricted to home improvements.
Getting a Mortgage above the purchase price is most commonly seen in the case of Right to Buys. You will need first to check with the terms of your contract with the local authority you are buying from and also your professional legal representative.
This lending facility makes perfect sense to the mortgage lenders as the property is being purchased at a discount so there is equity in the property from day one to play with.
There is however another instance where this is possible and that is in the case of a concessionary purchase. What is a “concessionary purchase” well it is a property bought at a level below its true worth. For example, a parent offers a property to their child below the market rate due to their relationship. Other examples of concessionary purchases might include employers selling to staff or landlords to long term tenants. At this point, I must defer you to a professional Tax Adviser to make sure this is permissible for tax reasons and does not fall foul of any tax avoidance.
The mortgage lender, in this case, is a regional based building society with national coverage and they will allow up to 95% of the open value for home improvements to include the purchase.
I”m a professional Mortgage Broker and if you are looking to get a Mortgage above the purchase price of a property for home improvements for either Right to Buy or a concessionary purchase please get in touch.
