First Time Buyer Advice

Rik1087

Good afternoon,

I am after some advice on particular parts of the buying process if possible.

Quick background: Me and my partner in our mid twenties found a new build 3 bedroom house in our local area. The houses have been valued at 250k - no such incentives you usually get with NB's instead its fitted with everything, carpets, curtains, lawn, appliances etc. We had some initial issues with the developer and Connells the estate agent - as origianlly we went through Connells for the mortgage in principal, which was agreed, yet the developer refused to listen to our offers until we agreed to use their broker (thats another story all in itself though)

Anyway, a price was eventually agreed at 245k - granted not a huge discount, but room for negotiation with the developers rep was slim - His attitude was more or less 245 is asking price if you dont match that then go away - They have sold 12 out of the 17 plots to date off plan, and the show home is going to go up end of July, which in their eyes i presume they believe will be the extra push needed to sell the remaining plots - In short, we were dispendable.

Now my gut feeling is we overpaid, but it was a head against heart moment as we loved the house, the location, the schools and ammenities nearby etc....

My question is (and i apologise for the above to finally get to the point).....

We have come up to the valuation point - Nationwide are our lender, and whats been agreed in principal is a £62,500 deposit from us with a £182,500 mortgage.

If the valuation comes back and only values the property for instance at £220,000 what happens?

- Will Nationwide still provide us the full £182,500 mortgage because its still below the value?
- Are we idiotic to still agree to the purchase price of 245k knowing how much its worth (on this note, this will be a property we spend the next 15-20 years of our life in - which negates the issue of negative equity to a point)
- Knowing how the devloper has been to date, would it be expected for the devloper to lower the purchase price from 245k to the valuation

With everything in mind, and the fact that we will be in the proerty for a long time - Would you walk away? Or would you accept you're paying over the odds, but take deficit in hand and hope it will balance itself out over the period we're in the property, added to that you love the house/area/schools etc.

I apologise for the length of the post, but any advice - wisdom would be much appreciated.

Cornucopia

Can't answer the emotive side of your question, but the valuation is the surveyor's estimate of the property's value. If it comes back at less than the developer's price, then what happens will depend on the maximum loan-to-value of the lender, and how much deposit you have available.

So... your current figures come out at just under 75% LTV. If the valuation comes back at £220k, then you required mortgage rises to 83% LTV. If that is above the lender's maximum, you'll need a new product/new lender/more deposit.

To keep within (say) 80% LTV, you'd need to only take £176k mortgage, leaving a deposit of £69k to find.

Depending on where you are in the country, I'd be surprised if you couldn't find a less difficult deal elsewhere.