LTV calc: Lender valuation or purchase price?

adam_rbts

Hi all..

I'm a bit confused. Can anyone confirm whether the LTV is based on what the lender values the property as or the actual purchase price? A mortgage advisor has told me today that is based the purchase price but I had thought otherwise.

We are looking to buy my parents house at a discounted price so the difference in LTV calculations has a large influence on the available mortgage rate..

cheers in advance

andrewmp

It'll be valued at the exact amount you're buying it for.

silvercar

As you are buying from a relative, and can therefore clearly demonstrate that you are getting it at less than market value, some lenders will accept the market value as the "V" in LTV.

See a broker for advise on how to phrase this correctly and which lenders will be happy with a "vendor gifted deposit". These have had bad press recently as builders used them to artificially inflate the price of a property to create a false deposit. Some lenders are still happy with these when the gift (of the deposit) comes from family who are happy to confirm it is a gift and doesn't require repaying.

feisty1

silvercar wrote: »

a "vendor gifted deposit".

not vendor gifted deposit


This will be considered as a concessionary purchase, in most cases no deposit is required where the difference between gross purchase price and present valuation is more than 10%.

adam_rbts

Thanks for the info everyone.. certainly given me more to think about.

Does anyone have an idea of whether "concessionary purchase" loans (as suggested by feisty1) are widely available amongst lenders..?

cheers again

feisty1

Yr adviser will know, but it won't be a problem as long as u meet other criteria, income etc.........good luck

Trollfever

A mortgage advisor has told me today that is based the purchase price

Find a professional mortgage advisor.

koexelek

It will be based on the LOWER of the purchase price and what the valuer deems it to be worth.

If the surveyor thinks it's worth more than the purchase price, he won't say so, but if he thinks it is worth less than the purchase price, he will devalue the property

herbiesjp

What figures are you actually looking at?

What is the property value and what amount are your parents happy to sell to you for?

It should be straightforward - some lenders are a little fussy with these family gifted deposits though.

The ones that are not will want a letter from your parents saying they are gifting you the diffference and that they do not want repayment - which should be easy for you.

feisty1

A concessionary purchase is not a problem with a mainstrean lender, that is what I have been working on all afternoon.........

herbiesjp

Same here with a family gifted deposit