LTV and price renegotiation help needed

tazgirl

Hope you guys can help - have really confused myself and starting to panic.
We're hopefully buying a property that was on the market at £209,500 and offer accepted at £205,000. We've applied for a mortgage with Nationwide for £184,500, so 90% LTV. We've 'booked' this and paid arrangement fee. Our equity from current sale makes the difference and pays moving expenses and leaves us around £6k for new furniture etc etc.

We've just had homebuyers report done and it's flagged some building work that really needs doing urgently, so we're getting quotes for this and going back to renegotiate the price. However, I'm not sure how this would affect the mortage - if we agree to pay £200k for the property, then the £185k is over 90% LTV, so will we have to reapply for mortgage and pay different interest rate? (we still need £185k as need extra money to get work done) If we get them to drop to £195k, we're edging towards over 95% LTV, which can't be done?

BTW, the surveyor agreed with £205k as fair value for property in current condition.

Have we applied for mortgage too early, will we have to pay arrangement fee again, how on earth does it all work??!! And at what point do we go see the building society again? Help!

ScoobyZ

I always though they would hold back the amount of the work that needs doing.

So you either. Get them to do the work and pay the agreed price. Which means that they pay the 5k for work and you pay the £205k or

You pay 200k for the house and have the work done yourself the building society release the extra 5k once the work is done.

silvercar

if the property has been valued at 205k in current condition, then you should be able to get the max LTV allowed based on that price. If 90% LTV then they should give you 184,500.

The seller may say that the price agreed reflects the current condition, ao you may not get a reduction at all - worth a try though.

[part of the mortgage is generally only retained if the property is not worth the value until the work has been done.]

Ian_W

Being Devils Avoccado for a mo - if I was the vendor I would make the perfectly reasonable request to see a copy of the valuers report before discussing a reduction of the accepted offer you made. If the valuer "agreed with £205k as fair value for property in current condition" I would be very loath to reduce the price further as the survey is saying it is worth the agreed £205k w/o the work being done - so based on that valuation why should I fund the works needed?
Hope that doesn't happen but I think you should be prepared for it.
If you applied through a broker speak to them about your concerns, if not speak to NW. I would be surprised if they required a fresh application and fees. Stuff like this comes up all the time on surveys and renegotiations take place but there could be problems if it's going to go over 95%.

tazgirl

Thanks guys - I guess we'll just have to speak to the NW and see what they think. I'm hoping that we can get the £185k based on the value.

Agree that vendor might tell us to go jump, but it's worth an ask. They (some would say foolishly) said when accepting our offer that the survey may raise some issues and they'd be prepared to drop to £200k if that was the case... thus we'll take them at their word. Of course, if as you say they ask to see the survey in full, then they may reconsider - but given the amount of work (none of which would have been noticable on viewing as it's structural and roof stuff) I think we might be in with a chance.
Thanks again - got survey results on Thurs so no chance to do anything before bank hols except worry!

MortgageMamma

devils avocado Ian, v funny!!

Ian_W

tazgirl wrote: They (some would say foolishly) said when accepting our offer that the survey may raise some issues and they'd be prepared to drop to £200k if that was the case...

Unless they ask, don't show them the survey just the estimates for the work that needs doing. Sounds like they knew there were probs so they may not query the valuation. If they've already mentally [and financially] prepared themselves to accept £200K you're probably half way there.