LTV or Purchase Price whichever is lower

dj427uk

Hello,

I have had a mortgage agreed in principle having made a verbal offer to a firend to buy their house. The house was valued by an estate agent, I had an offer accepted below the asking price (estate agents valuation).

The motgage company at the time of maing an offer in principle knew what offer I had made and had been accepted, and offered me 75% of the original valuation and not the agreed purchase price.

The deposit I have is for the difference between the amount of the mortgage and the purchase price. Now I am concerned as I am awaiting the formal mortgage offer following the survey/valuation. If they only offer me 75% of the purchase price as the mortgage I have to find a much bigger deposit? Is this correct? The valuation for the mortgage lenders has been done and the property was valued at the original asking price not the lower agreed sale/purchase price.

Any help would be good, first time buyer who is struggling with all the clauses/terms.

Thanks

DJ427

silvercar

If they only offer me 75% of the purchase price as the mortgage I have to find a much bigger deposit? Is this correct?

Generally yes.

Sometimes (and only some lenders) will consider a gifted deposit, this is where the property is priced at the valuation and the seller "gifts" you the difference between the valuation and the agreed price. So effictively you are paying the agreed price but it is all dressed up to create part of the deposit from the loss the seller has agreed to take.

You have to be careful with this, as it is viewed suspiciously. After all, if the seller could get the full price they would. More likely to be accepted when buying from relatives and possibly friends.

You would have to declare this to the lender and your and your seller's solicitors.

DVardysShadow

dj427uk, they offered you 75% of initial valuation - what %age of initial valuation are you putting down from your own savings? If you tell us this, we can come up with th LTV that the lender will be looking at and advise on how it might play out.

dj427uk

They offered me 75% Loan to Value on the Sellers Valuation - £74,000. I was borrowing £55,500 for the loan/mortgage and had a deposit of £9,500 which brings the total too £65,000 which is the agreed sale price. The mortgage company knew of the £65,000 offer I had made and the sellers valuation of £74,000 they knew the £65,000 was the agreed sale price before writing to me with the offer in principle. The mortgage lender has done their valuation and my survey and the property has been valued at £74,000 which is more than the purchase price. My concern was if they only offer me 75% of the purchase price rather than the valuation that would be a mortgage offer of £48,750 and not the £55,500 they had prev. mentioned meaning my deposit would have to rise to £16,250 a further £6750 on what I have.

Thanks

Dj427uk