ltv, what exactly is the value??

ollski

When mortgage providers are offering ltv rates what exactly qualifies as the value?, is it asking price, agreed sale price or the surveyors valuation?. I would imagine the fair way would be the last one but a greedy bank way would be the second?

Annisele

Surveyor's valuation.

The surveyor's valuation won't be more than agreed asking price (idea being that if the true value was higher than the agreed sale price, the vendor wouldn't have agreed to sell) - but it might be less.

ollski

I'm just thinking as a first time buyer with no chain in a depressed market I may be able to get something at below its genuine value. Does this not make the system slightly biased towards some buyers? (surveyors for example):)

Ah don't worry I've just worked out whatever happens I can't possibly win!

opinions4u

ollski wrote: »

When mortgage providers are offering ltv rates what exactly qualifies as the value?, is it asking price, agreed sale price or the surveyors valuation?

The lower of the purchase price or valuation.

You still need to be introducing a personal deposit in the overwhelming majority of cases and this is what is driving the deal you get.

I would imagine the fair way would be the last one but a greedy bank way would be the second?

Why on earth does this make the bank "greedy"?

There are specific circumstances where the "greedy" lender will accept a market valuation that is higher than a discounted purchase price, e.g. right to buy.

Basing their lending on the higher figure from valuation and purchase price as policy leaves them wide open to mortgage fraud.

blueberrypie

The "genuine value" is whatever someone is willing to pay for it. What it was worth last year or might be worth next year is meaningless - if you default and the lender has to repossess and sell, it will only get what someone else is willing to pay - and if they were willing to pay more than you are, they'd be offering more than you.

CLAPTON

the value as referred to in the 'LTV' figures is whatever the mortgage company says it is... it won't be higher than the selling price
I've no idea what you mean by 'genuine value' ..whatever is that then?

ollski

Its ok I'm just thinking out loud. If I am looking at a house which has been on the market for several months at 280k and I get an offer acepted at 230k as the vendors are desperate to sell then a 15% deposit would be possible on the lower value but not on the higher. This was all I was trying to work out

blueberrypie

ollski wrote: »

Its ok I'm just thinking out loud. If I am looking at a house which has been on the market for several months at 280k and I get an offer acepted at 230k as the vendors are desperate to sell then a 15% deposit would be possible on the lower value but not on the higher. This was all I was trying to work out

My point when I commented on "genuine value" is this: if that house was genuinely worth £280k, it would have sold for £280k. If it was genuinely worth £250k, it would have sold for £250k. If the vendors sell at £230k, it means they can't get more than that for it - and thus the genuine value *is* £230k.

And if you defaulted and the lender had to repossess and sell the house, that £230k would be the most *it* could hope to get too - so that's the value they'll lend on.

beecher2

ollski wrote: »

Its ok I'm just thinking out loud. If I am looking at a house which has been on the market for several months at 280k and I get an offer acepted at 230k as the vendors are desperate to sell then a 15% deposit would be possible on the lower value but not on the higher. This was all I was trying to work out

That's right because its value would be 230k, not 280k.

ollski

I understand that but there are surely certain variables. Suppose the vendors had an offer of 260k but from someone who was part of a chain and they decided that even though my offer was 30k less the lack of a chain and speed of purchase was worth that loss. Surely that doesn't mean the value of the property is 230?

Annisele

ollski wrote: »

I understand that but there are surely certain variables. Suppose the vendors had an offer of 260k but from someone who was part of a chain and they decided that even though my offer was 30k less the lack of a chain and speed of purchase was worth that loss. Surely that doesn't mean the value of the property is 230?

It means that, in an arm's length transaction, a buyer and a seller agreed on a price of £230k - so yes, the property is worth £230k.