Can you get a mortgage on a house being sold below market value?

A friend has the chance to buy a £400,000 house in Brighton for £215,000

Q A close friend of a friend of mine has offered to sell him a house in Brighton for £215,000 even though its market value is £400,000.

My friend, who is self-employed and 55 years old, is a first-time buyer renting in London. He currently has a mortgage offer of £215,000 on a one-bedroom flat – also in Brighton – which is in place until the end of June. Obviously, the house is a much better proposition but his mortgage adviser has told him he would not be able to get a mortgage on a property that is not being sold at its market value. Is this true? Buying the house so cheaply seems too good an opportunity to pass up. 
CF

A No it’s not true. According to Pete Mugleston of onlinemortgageadviser.co.uk, it is perfectly possible to get a mortgage on a property sold at below market value. He says: “There is an urban myth that to purchase (or sell) a property well below its actual worth may be unethical – or even illegal – in some way. But buying a house well below market value, with or without a mortgage, is generally a perfectly acceptable practice.”

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