Ltv ??

ktmozz

Hi I hope someone can help.... Where do you stand with a mortgage company if you are buying a house cheaper than it is worth? My situation is this.... I've asked to buy a house for £142000 minus a 10% deposit.... Therefore lending 90%. However when the survey is done if the house is worth more ( I believe it's worth about £160-170 000) ... Does that mean I need to borrow less than 90%? Thank you in advance

GMS

Lending calculations will be based on the LOWER of the valuation or purchase price unless inter family or right to buy sales

kingstreet

ktmozz wrote: »

Hi I hope someone can help.... Where do you stand with a mortgage company if you are buying a house cheaper than it is worth? My situation is this.... I've asked to buy a house for £142000 minus a 10% deposit.... Therefore lending 90%. However when the survey is done if the house is worth more ( I believe it's worth about £160-170 000) ... Does that mean I need to borrow less than 90%? Thank you in advance

When you put £142,000 as the purchase price on the application, the surveyor will determine if the property is worth that and is suitable security for a mortgage.

The mortgage report and valuation does not give a "fair market" value figure and as GMS said, the lender bases its lending decision on the lower of valuation, or purchase price.

ktmozz

Forgive me as I am confused easily... Basically when the survey is done they will either agree its worth the £142000 and that's what they will value it at or they could say its worth lower? They would never say its worth more? Thank you in advance.

Yorkie1

Highly unlikely to say it's worth more.

Most likely to say it's worth what it's being sold for, or to value it as less - in which case the lender will only lend 90% of the revised lower valuation.

Thrugelmir

ktmozz wrote: »

They would never say its worth more? .

If it was worth more you would have offered a higher price.

lee111s

My valuation came back at the exact purchase proce, it's not a coincidence! The time you'll come to benefit is when you remortgage. You can then state what you think the house is worth and if they agree, bingo you have a lower LTV

ktmozz

Thanks... that was the answer I was looking for. I know the property is worth more as every house in that row has sold for between £165000 and £190000. They were built in 2005 and are 3 floor town houses. I think the vendors are in financial difficulty and thats why they are selling through an agent who specialises in quick sales for the price they need to clear their mortgage. The remortgage thing is what I thought....will probably remortgage in 2 years time when fixed rate runs out, obviously depending on interest rate in the future, and hopefully lower the LTV.

lee111s

Yep that's what I'm hoping for in a couple of years!

jackieblack

A property is only 'worth' what someone else is prepared to pay for it.

ktmozz

lee111s wrote: »

Yep that's what I'm hoping for in a couple of years!

Nice to know someone thinks the same as me!