Borrowing more than the purchase price.

B

Brenbo

Registered User
Messages
46
Can anyone see a problem with this scenario or am I over looking something???
For example
I purchase a site with PP for 70k (value is100k) however I tell the lender I’m paying 100k for it.
Therefore I pay for the site (70k) and have 30k left over.

Is it that easy or am I missing something?
 
The lender will want a valuation by a valuer/surveyor of their choosing, so they (valuer) would need to be onside as well for your scheme to work. Your solicitor may need to be involved as well.
 
This sort of action could very easily be construed as fraud. As CCOVICH said your solicitor will have to comply with your scheme and I can't see that happening.
 
Funnily enough what the bank care about is the value of the site, not necessarily what you are paying for it. So if a valuer is happy to value it at €100000, then you will be able to work on that value.
 
If the value is actually 100k and you pay 70k, apart from declarations to lenders, then you also may have taxation implications on the 30k difference.
 
You are assuming that your lender will hand you a cheque for 100K and let you pay for the site from this and keep the change. I may be wrong, but I thought that mortgage lenders were not that trusting.

Surely, their solicitor will check that the cheque is used to buy the site and
will therefore know the purchase price.
 
Lenders base amount offered on the value or purhcase price, which ever is the lesser, so in this case, the contract price for purchase of site will be noted at €70k, so therefore €70k is what the lender will work on

regards

DeirdreL

www.rea.ie
 
You must log in or register to reply here.
Back
Top