Not quite as simple as you make out. You cannot simply use a % of the discount to pay fees.
Using you analogy you buy at £90,000 but get a mortgage at £95,000. This cannot work as a straight transaction. You suggest lying to the mortgage company but it is not only you as the vendor and both solicitors would also have to lie.
The way this was traditionally done was to buy at the discount using a bridging loan and then do back to back re-mortgage at whatever %. This works.
Then other way is to use a third party between you and the vendor who buys at the discount and then does an immediate subsale to you at the higher price for which you have the mortgage with a gifted deposit. Obviously the third party needs to be able to buy in the first place and you need to trust them.
I have dealt with both methods and if anyone is interested in a purchase this way pm me.
Bear in mind that lenders do not like any form of a gifted deposit these days nor do they like the back to back remortgage.
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