LTV (loan to value advice please)

Strawberry_virgin

I am currently selling my house in Scotland and looking to downgrade due to change in circumstances. I will have approximately £20,000 worth of deposit towards my new purchase but want to spend as little of this amount as possible because I need the cash to pay off some of the other debt later on + moving into my new home. I found a property for sale which is currently on the market for offers over £70,000 but the home report state it’s valued at £80,000. The current trend in Scotland is such that many houses are sold 10-15% below the valuation price and this property is repossessed, so my hope is to get it for around the asking price. I am interested to know how the banks calculate their LTV % (loan to value) because I called Yorkshire Building Society earlier and asked the same question and the initial response was that they take the property value for calculating, but once I asked to clarify they don’t mean “purchase price” they came back and said, “yes we calculate on the basis of the purchase price” I don’t want to go for 90% LTV if I can get 85 or even 75% but providing they calculate the LTV on the value of the property. I also understand the actual term used for calculating LTV on purchase price is called “Loan to Cost” or LTC, so are most banks misrepresenting their products or is YBS trying their luck to sell me their more expensive product. Any help would be much appreciated.

GMS

LTV is calculated using the LOWER of the valuation or purchase price. Example:

£100,000 value, £100,000 purchase price, £80,000 loan = 80% LTV
£100,000 value, £90.000 purchase price, £80,000 loan = 89% LTV

Strawberry_virgin

GMS wrote: »

LTV is calculated using the LOWER of the valuation or purchase price. Example:

£100,000 value, £100,000 purchase price, £80,000 loan = 80% LTV
£100,000 value, £90.000 purchase price, £80,000 loan = 89% LTV

Not what I want to hear but thanks anyway. Should they not call it Loan to Cost instead then?

Meeper

Not really, because the value of something is whatever people are prepared to pay for it!