New mortgage - House purchase

elspeth240

Hi, I'm after a bit of advice if anyone can help.

When moving house, does the bank use the actual market value of your new property for mortgage purposes or what you pay? i.e:

If a house is valued at £250k but you manage to purchase for £200k and have a £50k deposit, would they say you had a 25% deposit or 40%?

Thank you

VIGILANT22

25%.......................

Conrad

Lenders lend always on the true market value of the asset offered as SECURITY for the loan.

If you pay under TRUE market value, the difference in equity between price paid and true value may be used in place of a real cash deposit where the transaction is felt to be not for fraudulent purposes 9say the seller avoiding Tax or something). Many lenders only accept such deals where the seller and buyer are blood relatives.

elspeth240

Ok, thank you!