I'm freaking out!!!! Valuation / Survey

badger8

pinkteapot wrote: »

So, you're buying the house without having a survey done?

Please consider getting a Homebuyer's Report done. It's the most expensive purchase you'll ever make and you don't think it's worth spending a few hundred quid getting an expert to check it over?

Some of my friends thought surveys were a waste of money. They'd looked at the house and it "looked fine". They moved in and the roof was leaking. :eek:

Sorry I should of made it clear that we're having a survey done at the same time for us.
Thank you for all the great info. Until we've exchanged I think I'm going to worry all the way through.

G_M

badger8 wrote: »

Hi Guys,

Thank you soo much for the info. The only valuation in the one the lenders are providing us "free of charge".

Aaaaaghh!!!!

badger8

G_M wrote: »

Aaaaaghh!!!!

I'm not sure what you're shouting about. I understand what the valuation is for and why its free. This is for the mortgage company to "insure" their investment. All I wanted to know is if its common for it to affect the mortgage offer. I've got my own indenpendant Survey to satisfy our needs.

pinkteapot

badger8 wrote: »

I'm not sure what you're shouting about. I understand what the valuation is for and why its free. This is for the mortgage company to "insure" their investment. All I wanted to know is if its common for it to affect the mortgage offer.

If the bank's valuation survey comes in lower than the sale price agreed, the mortgage offer will be reduced accordingly.

For example, if they have agreed to lend you 85% of the sale price, they will then adjust this to 85% of what their valuation says.

Suppose you agree a sale price of £150k with a 15% deposit (£22,500) and an 85% mortgage (£127,500). The valuer then says the house is only worth £140k. The bank will then only lend you £119,000 as a mortgage (85% of £140k). If you still want to pay £150k for it, you would have to put down £31,000 as a deposit instead.

As for how common this is, I don't know what the statistics are. If you've checked what similar properties sold recently for before offering then you should be fine.

kingstreet

pinkteapot wrote: »

If the bank's valuation survey comes in lower than the sale price agreed, the mortgage offer will be reduced accordingly.

For example, if they have agreed to lend you 85% of the sale price, they will then adjust this to 85% of what their valuation says.

I'd just add an adjunct to this. It's the finite amount which would change on the mortgage offer, the lender wouldn't necessarily offer 85% because it was originally 85% at the outset.

If the property is downvalued, the purchaser has the option of renegotiating the price and this will then determine the mortgage situation. If the product has an 85% lending limit, this would need to be maintained, but if the product limit is, for example, 90%, then it's possible the LTV might be changed.

Here are two examples;-

£100k price with £15k deposit and £85k mortgage. Product limit of 85% and downvalued to £97k. Price renegotiated to £97k and buyer has to stick to 85% limit, so new deposit is £14,550 min and new mortgage £82,450 max

or

£100k price with £15k deposit and £85k mortgage. Product limit of 90% and downvalued to £97k. Price renegotiated to £97k and buyer can borrow upto 90% limit, so new deposit is in range of £9,700 to £15,000 and new mortgage in a range from £82,000 to £87,300.

The loan to value could then be 84.5% upto 90%.