Is this how it all works?

TrickyDicky

I am a new FTB, started to have a look round houses and have even had an offer rejected on a house we really like - ho hum...

But thats not my question. My question is about the size of mortgage the lenders would actually give you. For example, on a 75% LTV mortgage, am I right in thinking that the lenders would only be prepared to lend up to 75% of their valuation of the property rather than anything to do with the offer/sale price, even if your AIP is much higher?

with this in mind, here is an example, hopefully Ive got things correct:

I have 50k savings in the bank and the lender has given an AIP for up to a 200k mortgage. I find a house on the market for 250k, put in an offer of 225k and get the offer accepted. The mortgage company does a valuation and values it at 200k. Would the max mortgage available now only be £150k, giving me a shortfall of 25k?

Does this mean that usually, if your offer is actually above the banks valuation, you have to make up the difference out of savings?

Im just wondering all this because the house we've seen seems to be on the market for about 15% than the general going rate (based on looking at houseprices.co.uk), and wont take a lower offer (for now). Is there an easy way to guestimate the banks valuation?

_Andy_

Yes you're right, the lender will use the valuation figure to base the LTV on.

Bufger

the only thing you can do is compare like for like in the area as thats what the surveyors are likely to do. Do it by postcode and type of property, on some sites you can even filter the search to include features the house has.

Watch out though, banks over the last few months have undervalued (in peoples opinions) houses to stop them having to lend to cases that fall within their criteria who they still think may be risky. Its not all lenders and its not official but in my opinion it is taking place.

Your best bet is to stick with the realistic offer to save you losing a few £££ if the house comes in under the value you expect.

luckyfool

Typically on established non new build properties (especially outwith Scotland) it is rarely a problem for valuations to come in as less than the purchase price.