LTV - Is it actual valuation or cost?

Winky,_The_House_Elf

Just want some advice on Loan to Values and how they are calculated.

Currently renting a property from my cousin, who has offered to sell it to me for what he has on the mortgage and a couple of thousand to cover his costs. (He is more like a brother than a cousin, and wants to see me settled)

It's a generous offer, 3 bed semi, 11 years old, nice area for £105,000. There are 2 almost identical houses in the street up for sale at £135k, so extremely realistically priced.

I have £23k for a deposit etc, which means on what I am buying roughly 80% LTV, but I am wondering whether it could be calculated on the actual value of the house. Even if properties in the road (which have already reduced their prices this year approx 10-15%) are over valued, it would sell like hot cakes at £120K.

Does that make sense? It would mean a better mortgage rate etc. Any advice gratefully recieved.

Winky x

Troubled_Joe

It will go on the valuation given by the lender's surveyor.

Robert_Sterling_3

The lenders surveyor will lean on the side of caution.

Winky,_The_House_Elf

So would they be likely to say that as its is being sold for £105k that is all it is worth? or would they look at the local market?

It might sound daft but previously when I have had a valuation, it always comes in on exactly what I was buying it for, not a penny more (Once it was a sealed bid job, half the price of the others in the street for which I was immediatly offered £10k more than I'd paid by a neighbour, Which I didn't take as I wanted to live there)

Troubled_Joe

That happens in the vast majority of cases

skintandsad

In my experience, when we used to ask a surveyor for a valuation, we told them the purchase price of the property. They would then value the property AT purchase price, providing it was at least this amount; ie. not value it at more.

I anticipate the lender will consider your LTV as percentage of purchase price not value (if value is more).

HTH

(note: any subsequent remortgage would be based on actual value! - might be worth a short term deal and remortgage later?)

mlz1413

If you got an EA to give you a written valuation you could use that to present to the mortgage company, then the surveyor would base his valuation that.

If the valuation is for more than you are hoping to pay then that should give you the chance to discuss LTV and % rates with the mortgage company.

Winky,_The_House_Elf

Thanks everyone!

I might have a slightly different option, but not sure if it's legal

My parents can lend me an extra £15k, which would be re-paid to them by my cousin. Would that be classed as fraud if the house is actually valued at the £120k by a proper surveyor?

If it is I won't touch it with a barge-pole, it feels slightly shady, but it would save about £30 a month on the repayments (so if legal, £360 a year for only a tiny bit of effort?)

bigstevex

I'm pretty sure the surveyor wont value it over the price your paying! Its like the gifted deposit ones I guess!

alm721

Do you mean buy the house at 120k? If so I can't see whats wrong with it but there may be other things to consider. If its not your cousins main residence then wont he pay CGT? Isn't that based on sale price? (not sure how its worked out but think it would be) May still be worth doing just make sure of the implications for both of you.