2nd house, new mortgage LTV calculated off buy price or asking price?

pault123

Selling up, buying new house, is the LTV for a new mortgage based upon what I pay for the new house (i'm planning to offer £5k below asking price) or is it based on house as valued and the asking price?

The £5k could be the difference between above or below 75% LTV.

PasturesNew

LTV is worked out on the price you're buying it at, not what they're asking for it.

DVardysShadow

Do some sums. It may be worth paying more.

I can't believe I wrote that.

Blacksheep1979

DVardysShadow wrote: »

Do some sums. It may be worth paying more.

I can't believe I wrote that.

what a stupid comment - a fix sum deposit is always going to be a larger percentage of the overall price when the overall price goes down. So obviously (in several ways) the op is going to be better off paying less.

bobby-boy_2

Quote"LTV is worked out on the price you're buying it at, not what they're asking for it." Sorry Pastures new but your wrong! The clue is in the title Loan to VALUE LTV If the house is valued at 100K by the surveyor and you offer 200K on an asking price of 210K the bank wont give you 75% of 200K (150k) to buy it they will only give you 75K Any think above the 75% LTV you have to fund yourself.

pault123

Thanks for clearing it up, so it seems the VALUE is set by the mortgage company's valuer.

As it stands my LTV would be around 77% if the house were to be valued at what i'd offer for it. I need to get this below 75% to get an attractive deal.


Is the LOAN figure on the LTV set by how much mortgage you take out which covers the house, or how much mortgage you take out overall?

For example instead using £5k of my deposit (equity from old house) to pay the stamp duty/legal/EA fee's etc could I leave this £5k to put towards the new house itself to bring the LTV below the 75% and then take the mortgage out for £5k extra and use this for paying the fees? (in such a way people take out a bigger mortgage to put towards going on holiday/new car/clear credit cards etc)

pault123

I found this too "
APPRAISAL
A written report made by a licensed person as to the current estimate of value. The term also refers to the process by which this estimate is obtained. The "loan-to-value" is usually based on the appraisal value not the sales price."

Is there a "norm" for appriasal values to usually match the offer put in on house, value less than offer to ruin your LTV, or value more in line with asking price as the EA's did? Does it usually swing a certain way?

Soot2006

The value given by the lender is usually the same as the offer price ... unless they value it as less than the offer price (in which case you need to work out if you have extra money or want to walk away) .... It's very unusual for the lender valuation to be higher than the offer price.

pault123

Thanks Soot!

Just need to figure out now if additional borrowing above the house value is included in the LTV or seperate? Or is there a set allowance for fee's to be added without affecting LTV?

Soot2006

tbh at the moment "additional" borrowing is scarce ... It would almost certainly be included in the LTV.