Britannia Mortgages- First time buyer

litkid_2000

I have had an offer accepted for a property (purchase price £90k of house valued at £100k), so now need to get finance in place.

I previously spoke to my IFA and was told I would have no problem with mortgage availabilty. That was about 8/10 weeks ago, and the best I was quoted was an Abbey 2 year tracker (4.49 above BoE).

I have now had a look myself and see that Britanna are offering 3 year tracker at 3.79 above BoE on a 90% LTV. Seems the best deal at the moment.

Anyone got any experience with Britannia? It looks like an excellent deal for FSB looking for 90% LTV (which, because I paid 90% of the property valuation), means I can put my deposit towards doing the house up. I am not sure what risks there are with me ditching my IFA and going it alone?

Thanks

Thrugelmir

A word of caution. Your eventual lender may not value the property at £100k. The mortgage advance will be 90% of the valuation supplied to them.

Why not try direct with the Britannia. Nothing to lose.

litkid_2000

Thanks for the response.

Do you know if lenders are likely to value the property based on the survey or purchase price? The property is based in Scotland and the value is as per the Home Report (which are still active in Scotland).

Are you saying that the lender may be more inclined to base the 90% LTV on the purchase price as opposed to the Home Report seller survey?

Cannon_Fodder

A 90% LTV Mortgage is 90% of the purchase price. You still have to supply the 10% deposit.

Agreeing a purchase price sets the value more accurately than a survey/valuation.

headpin

Cannon_Fodder wrote: »

A 90% LTV Mortgage is 90% of the purchase price. You still have to supply the 10% deposit.

Agreeing a purchase price sets the value more accurately than a survey/valuation.

Why do you think agreeing a purchase price sets the value more accurately? Often the purchase price will vary from a professional valuation which is based upon a number of relevant criteria and not ruled by a purchasers heart. On most occassions they will generally be not be too far apart, but in any event the proposed lender will only take account of their own professional valuation and not any agreed asking price.

I assume that as this property is in Scotland there is some way to review an accepted offer should the valuation of the lender fall way short of the asking price. Or how does a buyer protect their position if the value is significantly less than agreed? I'm not very familiar with the Scottish system and welcome views. But in any case that would not affect the professional valuation of the property that a lender requires to estbalish loan amount.

Cannon_Fodder

In Scotland, aiui, a Home Report is commissioned by the seller. This includes a valuation.

If the buyers manages to knock them down, i.e. to the purchase price, this becomes the real value, that the Lender will base their lending upon - subject to their own in-house methods. I may be wrong, but I thought that in Scotland the Home Report is often relied upon by Lenders, so they don't bother with their own.

I'm not meaning to knock the surveyor's accuracy. Its just a fact of life that surveys and valuations are opinion, while what someone hands over is the true value. If someone wanted to pay more than the valuation, for emotional reasons, I don't think HMRC would calculate the tax due from the lower valuation rather then the price actually paid..!?

If a Lender does its own valuation, it will use it to confirm the purchase price is not so far out as to endanger their use of the property as collateral. If even further under the purchase price, it will change amount of £s which is 90% LTV, leaving the buyer if still willing to go ahead to fill the gap.

But if the Lender valuation is the same or higher as the Home Report, the mortgage LTV will still be based on the purchase price, not the second survey valuation figure.

Bottom line. The OP needs to pay 10% deposit towards the purchase price, if the Lender says ok to the 90%.

litkid_2000

Cannon_Fodder wrote: »

In Scotland, aiui, a Home Report is commissioned by the seller. This includes a valuation.

If the buyers manages to knock them down, i.e. to the purchase price, this becomes the real value, that the Lender will base their lending upon - subject to their own in-house methods. I may be wrong, but I thought that in Scotland the Home Report is often relied upon by Lenders, so they don't bother with their own.

I'm not meaning to knock the surveyor's accuracy. Its just a fact of life that surveys and valuations are opinion, while what someone hands over is the true value. If someone wanted to pay more than the valuation, for emotional reasons, I don't think HMRC would calculate the tax due from the lower valuation rather then the price actually paid..!?

If a Lender does its own valuation, it will use it to confirm the purchase price is not so far out as to endanger their use of the property as collateral. If even further under the purchase price, it will change amount of £s which is 90% LTV, leaving the buyer if still willing to go ahead to fill the gap.

But if the Lender valuation is the same or higher as the Home Report, the mortgage LTV will still be based on the purchase price, not the second survey valuation figure.

Bottom line. The OP needs to pay 10% deposit towards the purchase price, if the Lender says ok to the 90%.

I understand the Home Report is relied upon my the majority of lenders. It is essentially an independent objective survey carried out by a professional surveyor. If it is relied upon, then it would seem strange that the 90% LTV is not based on the valuation.

In my circumstace, the seller wanted a quick sale so I reduced my offer knowing I could get a deal. If the property was to remain on the market a bit longer it probably would have achieved £100k. If the property was to be surveyed tomorrow then it valued at £100k.

However, I am aware of the bank's overly cautious approach to the current market and if they take the view that the 90% LTV is based on the pruchase price then so be it. But that in effect contradicts the Home Report. What can be a more accurate valuation than that of an independant surveyor?

Cannon_Fodder

litkid_2000 wrote: »

What can be a more accurate valuation than that of an independant surveyor?

Plenty of threads on here with people disagreeing with survey valuations...

Although they are professionals, they are human, and they are dependant on the sources of information available to them. Which can be limited.

I have just had an independant survey done (as I am a cash buyer, there is no lender to give the surveyor cause to be cautious).

Despite not telling the surveyor the agreed price, guess what? - the survey report returned with the exact figure...there were no local equivalents for them to be able to arrive at this figure. It is not an obvious figure, that you would round to. This guy must be a genius..?

Or

They have simply had a chat with the EA or vendor, failed to find any comparables so have plumped for the purchase price - hardly very scientific !

Mistakes can be made. Second surveys are often called for, especially by people wanting to re-mortgage and protect their LTV. They provide comparables that maybe the first surveyor missed - and they often succeed in convincing the lender to re-value...

- but why would the lender do that if the surveyor is 100% reliable ?

Because they are not.

Back to purchase LTV. What someone pays is the true value. Which is why a repossession on a street can damage future selling prices. And if someone emotionally overpays, the next buyer along gets stuck with matching it unless they can find a way to talk the vendor down...

litkid_2000

Cannon_Fodder wrote: »

Plenty of threads on here with people disagreeing with survey valuations...

Although they are professionals, they are human, and they are dependant on the sources of information available to them. Which can be limited.

I have just had an independant survey done (as I am a cash buyer, there is no lender to give the surveyor cause to be cautious).

Despite not telling the surveyor the agreed price, guess what? - the survey report returned with the exact figure...there were no local equivalents for them to be able to arrive at this figure. It is not an obvious figure, that you would round to. This guy must be a genius..?

Or

They have simply had a chat with the EA or vendor, failed to find any comparables so have plumped for the purchase price - hardly very scientific !

Mistakes can be made. Second surveys are often called for, especially by people wanting to re-mortgage and protect their LTV. They provide comparables that maybe the first surveyor missed - and they often succeed in convincing the lender to re-value...

- but why would the lender do that if the surveyor is 100% reliable ?

Because they are not.

Back to purchase LTV. What someone pays is the true value. Which is why a repossession on a street can damage future selling prices. And if someone emotionally overpays, the next buyer along gets stuck with matching it unless they can find a way to talk the vendor down...

I cannot disagree with any of that. I would not have paid the asking price for the property (based on surveyor) because I thought it was overpriced in the first place. But I am sure I got it cheaper than it could have achieved if the sellers were a little more patient.

To conclude, I may not have as much spare cash as I thought, but it's not going to have a detrimenal effect.

Going to call up Britanna later today to see about the mortgage.

litkid_2000

litkid_2000 wrote: »

I cannot disagree with any of that. I would not have paid the asking price for the property (based on surveyor) because I thought it was overpriced in the first place. But I am sure I got it cheaper than it could have achieved if the sellers were a little more patient.

To conclude, I may not have as much spare cash as I thought, but it's not going to have a detrimenal effect.

Going to call up Britanna later today to see about the mortgage.

Just an update to say I now have mortgage! Britannia were very helpful and process very straightforward

GMS

Are Britannia aware that the purchase price is 90k? Lenders usually base their lending against the lower of the purchase price or valuation. If you have borrowed 90k with a 90k purchase price you have in effect a 100% mortgage. If the lender are not aware of this then it could fall apart on completion