below market purchases featured img

Below Market Value Purchases

Securing a property to purchase at Below Market Value (BMV) is the holy grail for investors, as it creates instant equity from day one. Whether it’s a distressed sale, a purchase from a family member, or a landlord selling to a sitting tenant, the opportunity is significant.
Talk To a Broker!

What is a BMV Purchase?

A BMV transaction occurs when a property is bought for less than its open market value.

  • Example: A house is worth £200,000, but you agree to buy it from the seller for £150,000.
  • The Problem: A high-street bank will base their 75% loan on the £150,000 price (lending you £112,500), requiring you to find a £37,500 deposit.
  • The Solution: A specialist BMV lender can often lend based on the £200,000 open market value. A 75% loan on £200,000 is £150,000 – covering the entire purchase price.

Who Needs It?

Inter-Family Sales
(Concessionary Purchase)

Parents often want to sell a property to their children at a discount to help them onto the ladder. This gift of equity can be used as the deposit, meaning the child often needs no cash savings to complete the purchase.

Sitting Tenants

Landlords selling off portfolios often offer discounts to sitting tenants to avoid estate agent fees and void periods. If you are buying the home you currently rent, you can use the discount as your deposit.

Professional Investors

Investors sourcing deals from distressed sellers – those facing repossession, divorce, or probate need a lender who moves fast and lends on value, not price.

Key Considerations and Terms

Open Market Value (OMV)

This is the figure the surveyor places on the property. For BMV finance to work, the surveyor must agree that the property is worth more than what you are paying for it.

The 6-Month Rule

Most mortgage lenders will not allow you to refinance a property within 6 months of buying it. This prevents you from buying cheap and pulling cash out immediately. In contrast, bridging lenders do not have this rule, allowing for day-one capital raising.

The Story

Possibly the most important factor in BMV purchases is the narrative and reason why the property is being sold at a discount. Lenders will ask why the property is being sold cheap. “Quick sale required” is acceptable; “Buying from a friend” can be seen as suspicious. Inter-family gifts must be formalised with a “Gift of Equity” letter.

Talk to an Expert Now!


andrea de santis bGWu7lcoZqY unsplash

How Silver Oak Capital Helps

  • Lending on Value, Not Price

    We have access to bridging and specialist lenders who will lend up to 70-75% of the open market value immediately. This is the key to minimising your cash contribution.

  • Handling Distressed Timeframes

    Distressed sellers usually want speed. If you are buying BMV because the seller needs cash in 2 weeks, a standard mortgage will take too long. We can deploy bridging finance in days to secure the asset and then refinance you onto a long-term mortgage at a later stage.

  • Concessionary Purchase Mortgages

    For family sales, we can source residential mortgages that accept the discount as the deposit. We ensure the solicitors are instructed correctly to register the “Gift of Equity,” satisfying the lender’s legal requirements.

FAQs

No, it is perfectly legal to buy a house for any price agreed upon. However, it is illegal to mislead a lender about the price (mortgage fraud). You must be transparent that the purchase price is £150,000 but the value is £200,000. Silver Oak Capital ensures full disclosure to compliant lenders.
Rarely. Lenders will usually cap the loan at 90% or 100% of the purchase price (even if that is only 60% of the value). They want you to have “skin in the game” or at least not walk away with cash and the property. The benefit is usually that you don’t have to put a deposit in, rather than taking cash out.
Yes, but repossession creates a “contract race.” Banks selling repossessed stock must get the best price. If you offer £150k and they accept, they will usually keep marketing it until exchange. If someone offers £155k, you lose it. You will need fast bridging finance to exchange contracts immediately and lock out other buyers.

Talk To Expert!

Contact Us
+44 207 459 4440