Can I borrow more than the agreed asking price??

deanogtv

hi
Looking for some guidance here, we have agreed a purchase price for our prospective house at £220k, which was originally up for sale for £250k but after a bit of haggerling we were able to get it at a good price.
We used a family friend who's a broker and was able to sure a mortgage offer from a high profile lender. The mortgage offer drop on our door step this morning and states they are willing to lend £225 as the original property price is £250k. My initial thoughts are that these figures are wrong however if the surveyor values the property at £250k is it ok for the bank to lend this???
We always planning to re-model the house and this extra cash will go a long way to doing that.
As we are first time buyers I'm not sure where we stand here and wondered if we should inform the bank we only require a £198k mortgage. I think the confusion has come from us saying we have the 10% deposit required for the mortgage however we actually have £25k meaning in fact we have more than the required 10%.
I waiting for the valuation survey report which is due today, if this says the property is only worth the £220k we have agree to then not a problem, that's fine. But if it came back at say £240k can we borrow to this or will the bank only want to lend to the agreed sale price???
Sorry for all the questions, I hope I have explained it clearly.
Just looking for some guidance really.
Thank
D

DannyboyMidlands

You need to tell the bank how much you are paying for the house, £220k. They will then lend you 90% of that.

kaylz39

Hi,

As far as I'm aware lenders aren't offering mortgages any more than 90% of your property value.

When we bought our first home 5 years ago we wanted an extra 10% on top so replace the kitchen and bathroom but were told they wont lend you money for something you physically haven't got. We also had a 10% deposit so we were basically asking for a 100% mortgage. Obviously if you fail to make your mortgage payments they can take the house off you and resell to get their money back, but they would be loosing money if they lent you more.

People usually use the equity in their house to gain some extra spends but obviously you don't have this as first time buyers. Maybe try applying for a loan after your mortgage has gone through, although it may be difficult after you've just got a mortgage.

I may be wrong, but were trying to buy our second house and have been advised by how extra careful lenders are nowadays.

deanogtv

Danny

Thanks for the advice, so if the valuation survey comes back at £230k we can only borrow to the agreed asking price.
Property is heavy discounted as the property is empty due to a death and the family want to sell asap.

Thanks

D

bris

Those days are gone, lenders will now only offer the sale price or the valuation, which ever is lower.

Your broker may be able to find you a higher risk lender who would push a bit more but these lenders come at a far greater rate.

sirmosh

The bank won't tell you if it's worth more than you're paying, only if they value it at less than you have agreed to pay. The confusion here will be down to the fact they don't seem to know how much you're going to be paying, you need to tell them straight away since it could have a big effect on your mortgage offer (possibly a positive effect if your LTV is going to be better now).

The bank usually won't lend you more than 90% of the agreed price (there are sometimes 95% mortgage available) and they'll require a minimum deposit, that means if you wanted money on top of the value of the house it'll have to come out of your deposit. For example if they want a minimum 10% deposit and you have 25k then you can keep 3k and put the 22k down as a deposit.

Beckyy

What the bank are saying is you can borrow 90% of the money to purchase a house up to the value of £250,000.

You will have to disclose the purchase price to the bank when yout in your proper mortgage application, and will not be able to borrow more than 90% of the purchase price, even if you purchase it for less than £250,000.

The only issue you will have is if the bank value the house at lower than your accepted offer of £225,000 - in which case they will only offer 90% of their valuation.

deanogtv

Thanks for the advice guys, its really nice to hear all the adive in common speak not legal blurb.
I was starting to dream of new sports cars and new kitchens but I'm guessing we have to count ourselves luck we even have an offer on the table

Beckyy

deanogtv wrote: »

I was starting to dream of new sports cars and new kitchens but I'm guessing we have to count ourselves luck we even have an offer on the table

We can dream!

DannyboyMidlands

Look at it this way, the valuation is just an opinion. The true test of value is what somebody (you in this case) is actually willing to pay.

kingstreet

You need to confirm the purchase price and the required mortgage amount asap as a new mortgage offer will be required before you can proceed.