FTB Mortgage Advice

The_Bunnet

Woud someone be able to help give advice please on whether I could get a mortgage to cover the cost of buying a home in Scotland.

At the moment I am looking to put an offer in on properties that are valued at approx £150k to £160k (advertised at O/O £140k)- however I have already lost out on 4 properties where I have bid approx £170k - but in each of the four cases the houses have sold for approx £180k - 25% to 30% over the asking price.

If I am going to bid £180k for the next property I go for I want to make sure I will be able to get a mortgage to cover it. Details are - £47k salary and £30k deposit - with no other regular expenditure so am more than confident I can afford a £150k -£160k mortgage. Will I be able to purchase a £180k property even though the value of the property is only £150k?

I have checked some of the online mortgage providers and some ask for the value of the property and the loan required - in these cases I cannot get a mortgage. If however they ask for the house price then I can use the higher value of £180k (the price I will have to pay) and with my £30k deposit then I have no probelm getting a mortgage.

I will go to a mortgage advisor as soon as my offer is accepted, but am loking for some advice please from the forum.

Ta

PoorDave

The_Bunnet wrote:

Woud someone be able to help give advice please on whether I could get a mortgage to cover the cost of buying a home in Scotland.

At the moment I am looking to put an offer in on properties that are valued at approx £150k to £160k (advertised at O/O £140k)- however I have already lost out on 4 properties where I have bid approx £170k - but in each of the four cases the houses have sold for approx £180k - 25% to 30% over the asking price.

If I am going to bid £180k for the next property I go for I want to make sure I will be able to get a mortgage to cover it. Details are - £47k salary and £30k deposit - with no other regular expenditure so am more than confident I can afford a £150k -£160k mortgage. Will I be able to purchase a £180k property even though the value of the property is only £150k?

I have checked some of the online mortgage providers and some ask for the value of the property and the loan required - in these cases I cannot get a mortgage. If however they ask for the house price then I can use the higher value of £180k (the price I will have to pay) and with my £30k deposit then I have no probelm getting a mortgage.

I will go to a mortgage advisor as soon as my offer is accepted, but am loking for some advice please from the forum.

Ta

The value of the property is surely the agreed price at the point of sale, not the offers over price, or the asking price.

I suppose the first thing to do is find out the most you can possibly borrow, look at the monthly payments for that, and see if you're happy with them, then you can go offering up your top figure reasonably happily, i suppose

jennifernil

You need to be able to borrow the price you are paying less your deposit. Do not go offering on a house before you have agreement on how much you can borrow based on income from the lender you intend to use. If you make an offer and it is accepted you cannot easily pull out. Have you seen a solicitor? Offers need to be submitted through one.
You can offer subject to satisfactory survey. If the survey throws up problems or gives a low valuation then you can pull out. Your lender will lend on the basis of the valuation. So if say you are offered an 80% loan on a house you are buying for £180000, but that is valued at £175000, they will only lend 80% of the £175000. You would need to find the difference yourself. So do not be over-ambitious, always keep something in reserve. You do not need to take as much of a loan as they offer if you don't need it.
Don't forget to allow for the fees and the stamp duty. Properties are going for anything between 20 and 30% over the OO price, but you don't want to offer over the odds. Use a solicitor who knows the area and can advise you on an offer. You may also find some fixed price properties.

The_Bunnet

Thanks for the advice. The scenario I will face is that I will need to offer approx £180k to secure the property, however the valuation of properties of this type is approx £150k.

Am I correct in saying that a lender will only lend to the valuation (£150k) not the price I will need to pay to get the property? I can afford a £25k deposit so would need a mortgage of £155k on a property that is valued at £150k - is this possible - will a lender give me a £155k mortgage on a property valued at £150k?

I have already lost out on 4 in the same area that were valued at £150k and went for approx. £180k.

Thanks for your help

jennifernil

Is the £150000 the OO price or the surveyor's valuation? I must say I find this scenario puzzling. A difference of a few thousand is not uncommon, but £30000!!!!!???? If I may ask, where exactly are you trying to buy?
What % of the valuation are you wanting to borrow? If it is over 90% the lender will be much more cautious.

jennifernil

After digesting your posts again and getting my head round the figures, I think you are perhaps setting your sights rather high. Did you have the 4 properties you lost out on surveyed? If so did you ask the surveyor why the valuation was so low? Our daughter bought a flat 2 1/2 years ago for £159000 and the survey value was £160000.
If you have had 4 surveys that has cost a bit, did you use the same surveyor each time? Some are more cautious than others. However I cannot understand how you can have made offers on 4 houses without having a mortgage offer in principal agreed. Or how you can have made an offer without seeing a solicitor (who would not have submitted an offer without the finance being in place).
It looks like you either need to find a lender who will give you a 100% loan (could be expensive), or lower your sights, or possibly both of these.
Having spoken to my son, who is on the lookout for a new house, it would seem that many agents are setting the OO price at 10% below what they reckon the valuation will be, and then expect people to offer between 10 and 20% over the valuation. Sounds rediculous to me!
Doing the arithmetic, that means you need to look at something with an OO price of around £125000.

homer_j_3

the lender will go from what value the survey brings back. I know that the house buying and conveyancing is slightly diff to england so not sure if this is why we are struggling to understand.

I have just been looking at a brand new product on the market this week which is aimed at people looking to increase their buying power and with the income you have would not be suprised if you could get well in excess of 200k if you are clean credit and no other commitments as the example we were shown was 31500 salary being able to borrow 200k.

Get the finance sorted with a maximum loan figure first then start your bidding process.

p.s I await all the affordability comments. This is a new product on the market and is only sold through brokers and through affordability calcs. The comparisons I was being shown made a 200k loan cheaper than the nationwide and halifax which is good if you need to borrow more than they can offer you..