How is a house valuated

Cheesedoodles

My mortgage provider has instructed the valuation on the property we're buying next week.

We're putting down a 40% deposit on the Purchase price of the property.

The house we're buying is in need of a complete makeover in terms of double glazing, wiring central heating etc. etc... Structurally it's fine, nothing wrong with it (my father in law is a builder and knows these things).

However, we're worried the valuation will be a lot lower than the price we're paying for it. It's ok if its a bit lower as long as the LTV is 70% or less. Otherwise we'll fall into a different interest rate bracket.

We KNOW we have paid a bit more than it's worth but it was a sealed bid process due to a lot of offers. In the end there was 11 people putting in a sealed bid (this in the UK by the way). Also, we're getting the work done much cheaper because of my father in law.

Am I right in saying that if the valuation increases our LTV ratio to over 70% it will hinder us getting the mortgage product we want? Or is does it still work on the purchase price (or somewhere in the middle)?

Let_Us_See

No. The lender will take the valuation and not the purchase price. I would not worry too much above 70% LTV level (unless the specific product you require has max lending at 70%), but try and keep it within 75% LTV.

Cheesedoodles

The product we've applied for is with Woolwich.

2 year fixed mortgage at 3.89%. It says its for up to 70% of the value of the home. That's what we're a bit worried about. If it's downvalued too much it might mean we're not eligible for that deal. But I guess we'll have to wait and see