Buyer getting 100% mortgage - problem?

leftieM

We had our offer accepted on our next house yesterday. We have two parties interested in buying our house and we were told by the lady selling us her house that she wants us to close on Wednesday so the whole process can begin.
The first people are three friends who need a 100% mortgage. They asked us yesterday what it would take for us to sell the house to them. I explained that it was possible that their lender's surveyor might come out and say our house wasn't worth whatever they offered and the whole thing would fall through. How concerned should I be really? How much 'give' is there in survey valuations?

pawpurrs

Congratulations, why do you think your house will be downvalued, is it overpriced?

100% Mortgages are quite a common occurance these days. I have not known many houses be downvalued at survey, but this can pose a problem regardless of % of Mortgage as normally the buyer would start renegotiations if this happens.
If its going to be downvalued, then I would expect it to be regardless of % of Mortgage, although on a 100% Mortgage if it is overvalued it poses a higher risk to the lender.
A lot of people now get mortgages over 100%, madness but there you are !

lynzpower

I think the delay or potential pitfall of this is that there are 3 people in the arrangement, and thus 3 lots of info to rake through and what not.

pawpurrs

Yes thats true, meant to say that too. Lenders prefer lending to one person or a couple as its less complicated generally regarding if they decide to sell up.

leftieM

I don't think our house is overvalued (naturally!) We put it on the market at oieo 162.5k. Houses here are selling for 10 -15% above asking price so we reckoned we would get at least 175k (average price for the area) but we hope for 180k as we spent money on a wooden kitchen with granite worktops and wooden floors. We have 4 beds too and we're one of the first ex-council houses at the end of a private road.
Current offer is 177k. If the potential buyers go to 180k or even 185k, which may be the new record for the area, will the surveyor run scared? Houses here are going up in value quickly.
My concerns arise for a story an EA told me. There was a house here a while back that went on at 115k. The bidding took it up to 152k. The surveyor valued the house at 136k and the sale fell through. (The same house went back on the market at 145k a few weeks ago and sold for 157k. It's been a mad summer!)

jamminjamaica

i guess you will have to wait and see. hopefully someone else with a lot less complicated situation as the 3 buyers comes along.

MortgageMamma

3 buyers isn't necessarily a complicated situation. I have done this for people plenty of times.

The questions you need to ask the buyers is, how far are they into getting their mortgage arranged and do they have an agreement in principle? Ask which mortgage lender they are using and how quickly they will be able to exchange contracts.

Unfortunately most lenders online AIP systems do not cater for adding three people onto a mortgage so it has to be assessed manually by most lenders which takes a little bit longer, but if the 3 applicants have done their homework or are using a mortgage broker things should go ok.

Good luck with the sale!

MM