FTB Increased Deposit after Valuation/Survey.

rickydark

Afternoon all,

Im trying to buy a house with a family member. Were both first-time buyers and jointly our salaries are 75k a year, we've found a house and have had the offer accepted at 295K.

We had an application for a mortgage with Nationwide accepted in principle with a deposit of 10%. Two weeks ago the valuation and survey was completed, but they came back last week stating that, they would only make a mortgage offer with a 15% deposit.

Were still waiting for these reports back, but our mortgage broker has said its down to the house being completely refurbished and converted. So the lenders are using the fact that it hasn't been sold in its current condition. (Could be seen as a new build.)

Im curious to know a few things.

1. Is it usual for lenders to increase a deposit amount after a survey?
2. Should a house that's been converted and refurbished automatically create the need for a larger deposit with lenders.
3. In theory is our house worth less than maybe what we are paying, hence the lender's wanting more money off us now and creating less for them to make back if reposessed.
4. Whats the chances of other Lenders coming back with the same information and not accepting 10% applications.

Also would it seem odd as to why our broker keeps asking if we've made a decision and asking can we proceed at 15%, when we haven't even seen ANY of the paperwork explaining as to why this is required. We had to request this as its "only usually issued, when they issue a formal offer"

Hope the above is clear, just a little confusing at the minute and not many questions are being answered!

Thanks in advance.

Thrugelmir

rickydark wrote: »

[*]Is it usual for lenders to increase a deposit amount after a survey?

Until the application is processed and the survey is performed. Then the underwriters won't have the information on which to base their final decision.

The lender is offering you to advance lower amount (not necessarily asking you to increase your deposit). Much in the same way that a glass is either half empty or half full, i.e. open to interpretation.

Simon_gloster

If the property is to be occupied for the first time in its current state, then as you say new build rules apply ie bigger deposit needed.

You'll get this with most lenders, but until you apply the offer will be subject to survey.

rickydark

Ah, so its sort of like a higher risk to a lender. In terms of value and so on, when a property hasn't been sold in its current state? Sorry Im quite new to this so didnt want to get the wrong idea in terms of the house value.

Just to clarify they 100% aren't prepared to offer an LTV of 90% only 85% and lower.

Wh05apk

If the property has been renovated, your broker should have been aware, and placed the application accordingly, a 90% "newbuild" with Nationwide was always going to fail.

kingstreet

Is it usual for lenders to increase a deposit amount after a survey?

On this occasion, it's the valuation/survey which has identified the property as being a newbuild equivalent. If it was ticked on the application form they should/would not have gone to valuation without identifying the lower loan to value which surrounds such cases.

If your broker didn't ask you this question and failed to tell the Nationwide about the conversion perhaps HE should refund you the wasted Nationwide valuation/survey fee?

For your information, here's the section from Nationwide lending criteria;-

The definition of a 'new flat or house' includes maisonettes and means one that has not been purchased (even if it is or has been occupied) within two years of construction, conversion or refurbishment.

New Build Flats & Houses - Valuations
The maximum loan to value on New Build Flats is 75%.
The maximum loan to value on New Build Houses is 85%.

rickydark

Ahh ha, thankyou very much for this information. The broker knew from the very start, that it was a "new build" and was the one to persuade us into using Nationwide, so this should of been picked up from the very start.

I guess I now have grounds to request that she takes the hit for £99 booking fee to switch to a 15% deposit mortgage.

Thanks for everyone's help.