increase deposit amount after/during Final Mortgage App to keep LTV favourable?

Midnight_Tboy

Hi all.

So we have a final mortgage application in for a house that had an offer price accepted, at full asking price of 110k.

We are paying a 40k deposit, so the total mortgage we're after is 70400. This is an LTV of 64%, so get a decent rate of 3.09%

The next step we're awaiting the homebuyers report to be done very soon. I've read lots of stories however, that it appears these always seem to undervalue a property.....maybe in collusion with the bank in order to make the LTV into a higher bracket (it seems a massive scam that you have to use the banks own valuations....talk about a conflict of interests(!))

Anyway.....I'm just wondering.......now say, for arguements sake, that the homebuyer report put the property value at 100k instead of 110....this would take the LTV to 70.4%...and therefore higher interest rate of 3.64%.

In the event that should happen.....would we then be given the option of paying 1k more of a deposit down, in order to take that LTV back down to 69.4% and therefore back into the 3.09% interest rate?

Just trying to think of possible outcomes for when we eventually get this report back so I can weigh up the options when the time comes.

jjlandlord

For a given deposit how can a lower loan ever increase the LTV?
Mr Gove is not going to be pleased.

Furthermore, what matters is the lander's valuation, not your homebuyer report.
Most importantly, if that valuation comes in at only 100k when you intend to pay 110k, you'll have to find an extra 10k cash to complete the sale.

Midnight_Tboy

sorry....I don't get what you mean?

The homebuyers report was what we paid for from Nationwide, instead of paying for the standard valuation....so firstly I'd have thought it would be the same value as what they receive too?

How would we have to find an extra 10k cash ourself?
As I said.....the original figures are
110k asking price - 40k deposit, 70.4k loan (loan + setup fee) = 64% LTV

If they were to claim house was worth 100k....then we would still be putting down 40k originally, meaning...
110k agreed but 100k mortgage price - 40k deposit - 70.4k loan = 70.4%

So by way of that, surely it would be ok to say back to them "ok what if we pay an extra 1k deposit at the start"

So...

110k house sale - 100k mortgage - 41k deposit - 69400 mortgage loan = 69.4%

Therefore back under the 70% LTV threshold?, and therefore paying a lower interest rate (assuming they don't try to scam you by saying you'd need to reapply all over again due to a changed deposit amount)

I don't get where you think we'd have to find an extra 10k? Please correct me if I'm wrong however

Midnight_Tboy

but then if they turned around and said the property was only worth 100k....I would still be asking for a loan of 70.4k....not 60k

So therefore.....deposit would change to reflect that.....ie
70.4k loan, 30k deposit - plus extra 10k to seller....which would be a 70.4....meaning total deposit

However....to take it to <70% LTV....request to change it to..
69.4k loan, 31k deposit - plus extra 10k to seller....which would make it <70% LTV then?

Is this not just arguing over semantics? End result...we'd still be paying out a total of 40k (or 41k if it was required to reduce the LTV to improve the rate)?

jjlandlord

Yes. I'm a bit slow this evening

Midnight_Tboy

aaah thanks lol

post deleted now so last doesn't make sense

Good I think.....I thought I was losing a marble missing something

But basically....Im still wondering...what happens in the event of them saying a house is worth 10k less. Do you get an option of changing the deposit paid (by decreasing or increasing based on whether you're expected to pay more to the seller as a top up?) Or do they then have you over a barrel, and then expect you to reapply all over again, with extra fees, if you want to change that figure? Basically, I just want to make sure I keep below a 70% LTV so considering the what ifs of what might happen from the report