A favourable mortgage

Have you got a family member who wants to give you a little head start in the property game? Whilst some might choose to offer a gift of cash or perhaps to go guarantor on a property for you, there is another set of circumstances we occasionally see at Lenny.

Let’s set the scene

Ben and Tyla came to Lenny to secure a loan to purchase the home they’ve been renting for a considerable period of time, something that happens more often than you might think. What made Ben and Tyla’s situation a little more special, was that the home was actually owned by Ben’s Aunt and Uncle, and they wanted to sell the home considerably under market value to help their niece and nephew enter the property market.

A Favourable Mortgage

There are very few instances that will make the bank put down some of their very strict criteria and situations like this? Is one of them. Purchasing a home for significantly less than market value puts you in an excellent position as a borrower, it’s some serious equity in your home from day one and for some borrowers, will mean they need absolutely no deposit. 

Lenders call this arrangement a ‘Favourable Mortgage’ (aka Related Party Transaction).

A Happily Ever After for Everyone

Being able to enter the property market in this way meant that Ben and Tyla were able to do so sooner, and without needing to save the required deposit that so often hinders renters.

Whilst the bank still needs to see that you are able to service a loan (ie make the repayments) with that pesky deposit requirement diminished or completely gone, it’s an incredible way to help someone you love to own a home sooner.

And for Ben and Tyla? Buying the home in this manner meant they also bypassed an agent (and the associated fees) and they didn't have to move house. A win for everyone!

We’d be happy to help. Book an obligation-free virtual cuppa with Lenny and explore the loan option that’s right for you.