New build and Mortgage

horngkai

Just wondering, if one offered to buy a new build at say £200k, and the lender valued it at £190k. For a lender requiring 25% deposit, will the money they lend (the 75% LTV) be calculated using the sold price or the valued price?

I am asking as people always say the moment you move into a new build, the price drop, and if so, wouldn't the lender always value the house lower than the price one bought the house at?

BoGoF

These days the valuation is likely to be based on the resale price so it is likely that the value will factor in the reduction. That is why you will often see 20% differences between what a developer wants and what the mortgage valuation is.

Oh, and to answer your question - valuation price.

Mark148

If the property has been valued at this price then I would make sure my offer was not above this price. If you have already paid a deposit on the property and not exchanged then I would personally renegotiate the sale price.

It's your money remember and a property is only worth what people are willing to pay.

kingstreet

A lender's surveyor will simply agree with the agreed purchase price, or may downvalue the property if he feels the future sale prospects in the event of repossession aren't as good.

If the surveyor downvalues, you'll have a few options;-

- ask the builder to accept a reduction in the price down to the surveyor's valuation. Your deposit and mortgage borrowing can be reduced accordingly

- proceed at the agreed price as the builder won't reduce. Effectively, you'll have to make up the difference, as the lender will lend a maximum amount based on the purchase price or valuation, whichever is the lower. If you like, you'll have to use part of your deposit money to bridge the gap, then the remainder will be used as your deposit, leaving you a mortgage at a higher loan to value

- withdraw from the purchase.

horngkai

kingstreet wrote: »

A lender's surveyor will simply agree with the agreed purchase price, or may downvalue the property if he feels the future sale prospects in the event of repossession aren't as good.

Does that means normally a lender surveyor will agree with the purchase price as long as its not too big a difference from what the true value of the house is?

kingstreet

horngkai wrote: »

Does that means normally a lender surveyor will agree with the purchase price as long as its not too big a difference from what the true value of the house is?

No. Something doesn't get through because the surveyor might think the difference trivial.

He values at what he thinks the lender could expect to fetch for the property in a reasonable market.

Builder incentives which exceed 5% of the value of the property can sometimes be excluded if the surveyor thinks the "gross" price then becomes excessive.

scorgeous

Hi

We bought a new build in autumn last year, and the lender valued the house at £18k less than that of the asking price of the builders, therefore the builders had to provide a "discount" on the price of the £18k and we bought the house at the lenders value and also the deposit we had was calculated on the lenders valuation. Hope this helps.

horngkai

did not expect builders to be happy with a further £18k discount to be honest. Will bear that in mind.