When any seller offers you a discount, it can be called a concessionary purchase because you paid less than the property’s market worth. A concessionary mortgage is required in order to complete a concessionary purchase. In most cases, this happens within families or friends. For example, individuals who want to help their family members climb the property ladder the concessionary purchases. Concessionary purchases can also be called BMV purchases. Similarly, concessionary mortgages can be called BMV mortgages.
This type of purchase can be quite tricky. Hence, it is important to take legal and tax advice before proceeding. If you are looking for mortgage for a concessionary purchase, it is better to take advice from an experienced mortgage advisor. There are so many mortgage experts available online. But some of them may not provide you with the right advice. To avoid wasting your money, choose mortgage experts from reputed organizations. If you are looking for advice from experienced mortgage experts, contact the team of Mortgage Experts Online.
Concessionary mortgages are of different types. Look below to know about them.
Just like the parents, a landlord would want to give some discount to tenants. Most landlords prefer to sell their property to their tenants to avoid an unnecessary headache.
Landlords who want to avoid unnecessary time wastage might be willing to provide a certain discount to current tenants who want to purchase their rental property. In this situation, lenders often impose a few limitations, notably:
- a reduction of 10% or less
- The borrower shall make a minimum deposit of 5% minimum.
- A minimum of one year must have passed after the borrower moved in.
Most lenders prefer the deal to be closed between the family members such as siblings, grandparents, uncles, aunts, etc. Lenders are pleased with this kind of concessionary buy since the reason for the reduction is extremely obvious—an individual is trying to help his or her family member.
There can be situations where developers wish to offer certain discounts—for instance, if they quick cash i.e., a quick sale-when it comes to the lenders they will carefully handle these transactions because discounts sometimes might indicate problems related to a property.
Very few lenders might agree to a developer’s discount mortgage. However, in this case, the interest rates and deposits can be much higher. For a concessionary purchase, most lenders might look for the following.
Income: Most lenders look for income proof to be confident that you can make the monthly payment on time without fail.
Property Type: A lender might also consider your property type for this.
Age: Some lenders might look at your age before approving a mortgage. For most mortgages, the tenure would be 25 years maximum. Hence, the lenders might not show any interest in elderly applicants.
Credit History: Some lenders might look at the credit history while some don’t. This can differ from lender to lender.
Deposit Amount: The more the deposit amount, the better interest rates, you can expect. But again, even this can differ from one lender to the other.