10% deposit, what's the problem?

moneyistooshorttomention

Quite...ie withholding deposit info. will count against you.

Because my estate agent and myself know the size of deposit being put down by my buyer, then that means we have been able to do our own calculations as to whether their salary is likely to be sufficient to service the mortgage they will need. We both drew the conclusion accordingly that my buyer can indeed afford my house and isn't looking at somewhere through "eyes bigger than financial stomach" goggles.

There is always the risk that a buyer will come along and try to put in a cheeky offer for a place because its above their price range or, alternatively, be deliberately looking for excuses to cut the price agreed AFTER their offer has been accepted. If someone has a decent percentage deposit then that should avoid "trying to buy more than they can afford" shenanigans and messing everyone else around.

banwa

If the vendor of the house I am buying (or the estate agent) had asked me my salary...well, they would have soon been looking for another buyer.

Full_of_angst

My buyer is a ftb (or I'm assuming that is the case as she is renting at the moment and it's a new mortgage - but doesn't mean she hasn't bought before).

She has a 10% deposit and the agreed price is 499,000. I accepted a 10% below asking price offer from her.

House was valued by the mortgage lenders on Thursday morning so I still have yet to hear the result of that. I'm assuming because they've been out to value that all the credit checks were done etc and the bank will lend her the money (subject to valuation).

I understand the worry though. I'll have bitten nails down to my knuckles over this weekend and until I hear the outcome. I would feel much less concerned if the deposit was larger and she wasn't buying alone.

witchy1066

banwa wrote: »

If the vendor of the house I am buying (or the estate agent) had asked me my salary...well, they would have soon been looking for another buyer.

I concur,

another point, just because someone is only putting 10% deposit down doesn't mean they haven't got another 10% and are holding it back to see what the survey throws up,

the only reason a seller would sell to someone that made a lower offer as the OP stated, is because they KNOW the survey will show problems and they presume the FTB would not have the funds if any sort of retention was made

OP from now on (if asked) tell anyone who asks that your LTV will be somewhere between 10 and 40% depending on what you would want to do to make that house your home

Full_of_angst

witchy1066 wrote: »

I concur,

another point, just because someone is only putting 10% deposit down doesn't mean they haven't got another 10% and are holding it back to see what the survey throws up,

That's a very good point and must admit I hadn't even thought of it.

neverdespairgirl

agrinnall wrote: »

You're a FTB looking to buy a property valued in the region of £450K? I doubt if many of the sellers of those properties would see you as the ideal buyer.

Can't see why not - in London.

We were first time buyers 18 months ago for a property valued at £695k. Our sellers didn't seem to mind at all, in fact, it made life easier for them as we weren't in a chain.

Full_of_angst

neverdespairgirl wrote: »

Can't see why not - in London.

We were first time buyers 18 months ago for a property valued at £695k. Our sellers didn't seem to mind at all, in fact, it made life easier for them as we weren't in a chain.

I quite agree.

I wonder also if many of these ftb of more expensive property are people who have spent years on their career and become ftb later (early 30's for example?). My ftb is a barrister and in her early 30's so I imagine she has saved a good deposit and also far enough up the ladder in her career to be in a good position to get a larger mortgage.

witchy1066

they seems to be a lot of assumption and discrimination going on with FTB
not all FTB are struggling 20 years olds

I hope the OP is reading this thread and getting some help from it

neverdespairgirl

Full_of_angst wrote: »

I quite agree.

I wonder also if many of these ftb of more expensive property are people who have spent years on their career and become ftb later (early 30's for example?). My ftb is a barrister and in her early 30's so I imagine she has saved a good deposit and also far enough up the ladder in her career to be in a good position to get a larger mortgage.

That's very similar to us - we were in our early 30s, and both barristers.

dtsazza

witchy1066 wrote: »

dtsazza, are you saying if a house is valued at £190k instead of the 200k expected , that someone with a higher ltv deposit would pay over the survey valuation ?
maybe I have misunderstood

(A bit late, but) that is what I was saying.

Of course, if the survey brings up issues that you were unaware of, then you may well want to reassess what you're prepared to pay. But otherwise, the survey says the house is as you expect it. You and the vendor have both agreed that it's worth £200k, and that this price works for both of you. The fact that someone else has a different opinion should be neither here nor there.

Someone with a larger deposit can simply "laugh off" the "wrong" valuation from the mortgage company, if buyer and seller still agree that £200k is a fair price. But with a smaller deposit this isn't an option, and you are at the whims of the surveyors.

if I am putting in 10% or 50% I would not be happy to pay more than the house is deemed to be worth by my lenders

I wouldn't be happy to pay more than the house is deemed to be worth by me. Other people can and will have different opinions, but that's entirely their business.

I would argue that for just about anything we buy, there are some people that will say it's not worth the money. So long as we are happy with our logic, we ignore them and go ahead anyway. And houses are no different, to my mind.