First-time buyers face many challenges, but there are more options than ever to help them get on the property ladder.

The mortgage lenders adapt to changing market conditions and offer different methods to borrow funds to buy a property.

This guide will cover everything related to concessionary purchases, including the financing options.

What is Concessionary Purchase?

Concessional purchases are when the property is bought at a lower price than its market value. This scenario is also known as below market value.

A concessionary mortgage, therefore, is a financial product that allows you to buy a property for less than its market value.

A property may be sold for less than its market value because of a number of factors.

You may qualify for discounts if the property transaction is between family members.

Benefits of Concessionary Purchasing

There are many benefits to buying property from a family member. Family members can help you finance the property and have inside knowledge about the property history. This reduces the possibility of unexpected surprises when purchasing property, such as broken boilers or planning permission issues.

What is the process of Concessionary Mortgages?

Alternatives such as a family-guarantor mortgage, cash gifts from relatives, or other methods to help with deposits are not available. A concessionary purchase is where a parent offers to sell their home to their child for a lower price. This acts as a gifted equity investment.

Concessionary mortgages: Interest rates

Concessional mortgage interest rates are often lower than those on standard market-wide mortgages. However, like most financial products, they are dependent on applicants’ credit histories.

The following factors can also affect the rates of a concessionary mortgage:

  • The amount of discount the property was bought for compared to its market value.
  • An additional deposit may be required to secure the mortgage.
  • The affordability factors of applicants.

Buy a house from a relative at a discounted price

Lenders may insist that property transactions related to concessionary mortgages be between close relatives only, such as parents, grandparents, and children. Other lenders might allow Aunts and Uncles to be included in the definition of family members, but this may not be required by them.

When considering the purchase of a property with family members as a partner, there are many other things to take into consideration. Some lenders won’t allow parents to live in the property after it has been sold. Therefore, funding additional property to the parents becomes an additional concern.

Related quick help guides:

  • What is the average time it takes for a mortgage application to be approved?
  • Concessionary Purchase
  • How to get a family mortgage.

Other considerations in relation to Concessionary mortgages

Trust is essential in all family-related transactions. Concessionary purchase issues can lead to disputes about ownership and rights.

It is therefore essential that all legal aspects of property transactions are fully covered, so there is no doubt about the intent of any transaction.

It is important to note that stamp duty operates in the same manner as standard property purchases. Concessionary mortgages between Tenants and Landlords

Tenants may want to buy a property after many years of living in rented properties. In certain situations, landlords might be open to such requests.

Transacting between parties you know can save time and money, but it also reduces stress. The intent and affordability of both the purchasers and tenants are better known. Property purchase chains are simpler and less likely to break down.