How much mortgage will bank lend?

looma101

We have put an offer on a house for £350000 with a 10% deposit (first time buyers). We have a mortgage from Halifax for the remaining 90% (£315000). We have ha 2 surveys conducted: a valuation by Halifax in which the property was valued at 350k in current condition and a structural survey. That survey has highlighted a number of problems, but most importantly that that the house needs a new roof which will be costly. It is likely that we are going to up back to the seller to renegotiate on price. If say, for example, the seller accepts a reduced offer of £335000, what is the position of how much mortgage the bank will loan? Ideally we would prefer to still borrow 315k and use the extra 15k to get the roof and other things done. Otherwise any reduction we see on the price paid will be a reduction on the mortgage but we won't have the money to do the repairs. What are other people's experiences? Many thanks.

beecher2

If you buy for £335,000 the bank will use that to calculate LTV. A £315,000 mortgage would give you an LTV of nearly 95% so this won't work. You'd have to pay a deposit of £33,5000 and get a mortgage for £301,500.

As your bank has valued the house at £350,000 in its present condition, the vendor may not feel the need to renegotiate with you on price.

kingstreet

The mortgage you can get and the product which applies to it are based on purchase price or valuation, whichever is the lower. Despite the mortgage report and valuation coming back at £350k, if you reduce the purchase price to £335k, your maximum mortgage will be based on that.

ie If you are applying for a 90% mortgage, you'll only be able to borrow £301,500, as beecher has said.

You will not be able to borrow money at the outset to carry out repairs. If you had more deposit, the solution would have been to reduce the deposit and used that money to pay for the roof.