New build part ex down valuation - what to offer

Bustiesmum

Hi all,

This is my first post and I would greatly value your advice.

Hubby and I started the process to part exchange our house for a new build property at the beginning of April. My husband hasn't got the best credit rating but we managed to get a DIP from Abbey (2 years fixed 3.44% -great!) with a 40% deposit. Initial checks were done and we were accepted for the mortgage subject to valuation. We heard nothing for 3 months despite me chasing it up with the mortgage advisor and the builder. We found out 2 weeks ago that the house had been undervalued at 145K (asking price £154950). This had been appealed (not at our request - the builders we presume??) but the appeal was unsuccessful. We were then rushed into applying for a second mortgage with Platform (1 year 4.26% LIBOR tracker then SVR approx 6%, £1495 fee - not so great!), as the mortgage advisor said that the builder wouldn't reduce the asking price based on 1 valuation. The 2nd valuation has come in at bang on the asking price and we don't know where to go from here. The mortage advisor was over the moon at the second valuation and kept saying that the house had now been valued at its true price. I'm sceptical!

Ive told the mortgage advisor that there's no way we're going with the LIBOR tracker as we wont be able to afford it if interest rates go up or we're unable to re-mortgage in 12months on a lower rate.

Our house is now ready and we've spent 5K on options. We can afford to add a bit more to the deposit if we go with the Abbey but not 10K, and we don't want to get ripped off buying a house thats overpriced.

The first valuer is local and I'm more inclined to believe his valuation as he knows the market. However the mortgage advisor says he's bitter because his house has been on the market a while and wont sell???

Sorry its so long but I'm rubbish at negotiations and my hubbys worse so we'd love some advice on how to approach this with the builder.

GDB2222

Well, first of all, your mortgage adviser is the last person you should be getting advice from on valuation. All he wants is his fee for arranging the mortgage, and he only gets that if you go ahead.

"Our house is now ready and we've spent 5K on options." How much money have you handed over, and to whom?

Bustiesmum

Sorry that wasn't very clear. So far we've paid about £1700 in total for the options, search fees and reservation fee. We pay the rest of the money for the options when we complete. The house has already been kitted out with all our options, even though we haven't exchanged contracts yet.

terrierlady

most new builds are down valued part of process of buying new thats why the developer usally asks you to use their F.A who knows where to place the mortgage. Options are normally paid in full before fitting as your choice lovely as it is is not the next buyers if you dont complete, the search fee would have gone to your sols not the developers. Hold steady the developer NEEDS to sell ,you can walk away ,let them chase you and keep pointing out the down valuation they dont like a low val as it effects the rest of the site most valuers value at second hand prices now adays check on line what the other plots sold for and when, take your time you will be fine.

TrickyDicky101

Your mortgage adviser isn't the one suggested by the builder/estate agents is it by any chance? Hold firm - the first valuation you had is far more likely to be closer to the 'real' valuation.

Bustiesmum

Thanks for your helpful replies. Part of the part exchange deal was that we had to use their mortgage advisor.

We're going to call them tomorrow with an offer of 145K and see what happens.

poppy10_2

Bustiesmum wrote: »

TPart of the part exchange deal was that we had to use their mortgage advisor./QUOTE]
Should have done a runner at that point. The fact that the mortgage advisor was 'over the moon' at getting you to pay an extra ten thousand pounds suggests that he doesn't really have your best interests at heart

Bustiesmum

Yeah we've come to that conclusion ourselves.

GDB2222

I've never bought a new house, but it seems such a strange deal. First, you are supposed to pay a reservation fee. Then you pay option fees. All for a place that you have not contracted to buy.

Curiously enough, you should be able to get your reservation fee back, if you pull out, under the house builder's charter. I'm not sure that applies to option fees.