Finally moving house - new home undervalued by £15k! Advice/experience sought

franklee

Gorgeestwo wrote: »

Like Milliewilly said its all dependant on your LTV etc, if there is room for manouvre within that and you can afford it then thats for you and the bank to decide, the bank are fully aware of what we paid for this house, they were perfectly happy to offer us more money if we needed it. So they were being pretty cavalier with their own money then ?

Why is that the bank being cavalier when it was you not the bank who paid the top up? Thing is the bank wants a certain amount of equity in relation to it's valuation so that if there is a forced sale they've a good chance of getting their money back. Your paying the extra out of your own cash doesn't change that. OTOH if you had borrowed more you said they'd charge you more interest (& maybe charges), so the bank is getting something back for taking more risk. In was quite normal in the last crash for people to pay over valuation IIRC.

Gorgeestwo

Because of what was written here, its not just us that were willing to put the extra in, the bank were willing to offer us more money, in their opinion they still wouldn't lose out even at a higher LTV. Yes it would have been a higher interest rate, but actually lower than alot of fixed rates around at the moment anyway. They were still happy they had enough equity and so are we, this is all about 8 weeks ago, so right in the midst of them being careful/cautious (which they should be)

cardsharps wrote: »

The OP isn't using his/her own money to purchase. He/she is using someone's elses. It's very easy to be cavalier with money and pay however much it takes when it isn't your own money you're doing it with.

What I'm trying to say is that the bank were willing to, even though the valuation had come in lower, give us more money, they were as sure as anyone can be that they wouldn't lose out on any money, so what makes us wrong for actually borrowing less, being able to put the bit extra needed in ourselves and buying, what was more than just a financial investment, a home home for our family to grow up in?

GDB2222

If I had the choice between borrowing £100,000 at the normal rate, or £102,000 at say 1% higher interest on the whole loan, I would go for the £100k loan or not go ahead. That £2k extra is costing £1,000 a year more interest.

Just a thought - don't know what your figures are.

Gorgeestwo

Quite similar to your example actually
if we hadn't come up with the extra ourselves we would have needed to borrow 105k, as we were able to come up with the extra we only borrowed 101k ( the vendors met us half way with the other 2k )

We definately didn't want to go onto the higher interest rate that was for sure and would have found the full 4k if we had, had to. (which I appreciate isn't always an option) Which is why it really is so dependant on LTV's etc whether or not its possible to be able to continue with the purchase if the mortgage valuation does come in lower than the 'agreed purchase price', but as someone already said it doesn't always have to be the end of it either.

PottyHouse_2

cardsharps wrote: »

What's the point in paying a surveyor to value a property if you're going to ignore their findings? And why do you want to pay more for a property than what it is actually worth?

now that really is mad,.

Correct me if I'm wrong but unless you are really rich and a cash buyer you have to obtain a survey/valuation in order to obtain a mortgage - don't have any choice in that matter.
Not sure if you've actually ever bought your own property but I don't really need to explain all that again - I guess I'm one of those silly people who leads with their heart not their head ??! You sound like a head person??

PottyHouse_2

GDB2222 wrote: »

Absolutely correct. They are there to protect the banks. You can/should get a survey done for your own benefit, but clearly the mortgage valuation is done for the lenders. Their criterion is for a fairly-forced-sale valuation, along the lines of what they could get if it was marketed for only a few weeks.

By the way, I agree that valuers are human, and a variation of 10% between valuers is pretty normal. That probably covers the £15k you were complaining about.

I'm curious about how you know what all the local prices are? You are looking at actual sold prices from nethouseprices or the like? How do you know what condition these houses are like inside?

Problem is the house we want is on a road that is quite sought after but there has only been 1 sale in the last year - I know that house needed a lot of work doing to it as I went to view it but I was assured by our IFA that house valuations are not based on the condition of the house or work needed but the market conditions and recent sales. However, saying that, if a house needs lots of work doing to it then it is going to have a lower selling price and can therefore make houses in the proximity appear to have a lower value - would you agree ??!!

GDB2222

PottyHouse wrote: »

Problem is the house we want is on a road that is quite sought after but there has only been 1 sale in the last year - I know that house needed a lot of work doing to it as I went to view it but I was assured by our IFA that house valuations are not based on the condition of the house or work needed but the market conditions and recent sales. However, saying that, if a house needs lots of work doing to it then it is going to have a lower selling price and can therefore make houses in the proximity appear to have a lower value - would you agree ??!!

Yes. The way surveyors usually do this is they say:
Value of house in poor condition = value of house in good condition less cost of doing the work.

In practice, though, houses in poor condition usually sell for more than that, because people underestimate the cost of work, or think they can DIY it for nothing, or value the chance to do their own thing, etc etc etc.

Who can tell what's happened in your case?

jamief

It sounds to me as if the original poster if thinking solely with their heart whereas the surveyor is thinking with their head (and experience).

Why on EARTH you'd want to pay more for a house than it is worth is beyond me.

PottyHouse_2

Gorgeestwo wrote: »

In our situation we paid what the property is worth to US, we had quite specific criteria and the house fitted those, the valuation was for mortgage purposes and we were in a position to be able to find the extra couple of thousand to be able to get the house we wanted. Just as some people will go out and spend a couple of thousand £ on an all singing all dancing tv, now that is mad imo. Our couple of thousand £ went on the extra we needed to buy this house. Buying this house is a long term move for us, ultimately house prices will go up again, who knows when and even if they don't in 20 odd yrs time we will own our own property that we've enjoyed living in.

We certainly weren't going to walk away from a property that suited us, when we were pretty limited in the first place because the suveyor valued it less than other properties that had sold in the area, that were alot smaller than it, who knows maybe he was having a bad day, he didn't come from this area at all, maybe the bank were trying to get us onto a higher interest rate but they aren't perfect and aren't right all the time, nobody is, as far as we are concerned its money well spent, that doesn't make us mad, it just means that to Abbey the house is only worth £136k but to us it is worth more as its our home and will hopefully be a long term one.

Thanks - I completely agree with what you say (we are in the same position) and it's nice to hear someone else's opinion that is buying a house as a "home" and not some investment which is seems quite a few responses on here are suggesting ! For a slight second I doubted my own judgement reading some of the replies but now you have bought me back to my senses! Thanks again :j

PottyHouse_2

Just to put a final reply on this one.

Thank you to all the caring, sympathetic ones that replied to me (I won't put the smug, synical ones in there!).

We did get our mortgage offer for the amount of mortgage we wanted and our LTV only went up by less than 4%.

Anyone else in the same position, hold tight, things will hopefully work out for you in the end.

I would also say to those who suggested "it isn't actually our money .. its the bank's .. blah blah blah" I am very sorry I was not born rich or inherited a vast estate or able to be a cash buyer, I am just like the majority of people living in this country who have to get a mortgage to own the home they desire, at the end of the day the banks are getting their money back from us and much much more ... hope you're as understanding if ever a circumstance like this happens to you .... whatever that may be :rotfl:!!!!!!!