Side Deal with Vendor

Hi, I am looking for some feedback on the situation we find ourselves in.
We were approved for mortgage on a property but the sale fell through. Subsequently we have found pretty much the exact house we are looking for..however the seller is proposing a side deal.. we pay 90% of agreed price on contract and 10% cash off the books after signing contracts, before closing. The seller is small scale property speculator who is in financial trouble and "wants something out of it".
Needless to say we are wary but the house and price are very good.
Has anyone heard of this type of deal?
How would it affect the valuation for mortgage? Do the bank take the contract price or their own valuation when calculating LTV %? We would need to use some of the savings we had included as our equity in the previous approval to make up the 10%. The price we would be able to get the house for would be up to 20% below current market value.
Any potential legal ramifications?
we want the house but dint want to leave ourselves open to issues.
Thanks

Have nothing to do with this guy,I had the same issue with a property we were interested in,several banks had an interest on the title and were I suspect just waiting to foreclose, he wanted so much cash under the table that the banks would stop the sale anyway as they would immediately have twigged what he was at.

Also you would be engaged in Stamp Duty evasion,not a lot compared to a few years ago but that's not the point.

Even if I had the cash I wouldn't have accommodated this guy and strongly suspect my Solicitor would want nowt to do with it in any event.

+1

Besides, most banks will only lend based on the lower of the valuation or the contract price.

There are too many risks for you in this kind of transaction.

Sounds like the vendor is encouraging fraud, this will only end in tears for any prospective purchaser. As earlier posters have stated, walk away from this

+1

Recipe for disaster ... don't do it.

tks..i know it, however tempting it may be

He is leaving himself quite open though to be honest, contracts signed, money paid?

How can he make you pay the remaining 10% at this point?

Having said that, I wouldn't get involved. Unless he was willing to go 30-40% less

Just curious - did the seller approach you directly with this proposal, or did it come through estate agent or solicitors?