Mortgage company surveyor undervaluation

Grssal

The house we want was on the market for £295,000. We made an offer of £288,000 which was accepted. We went along to Santander, where our current mortgage is held. We did all the paperwork, putting down £50,000 and taking a mortgage of £238,000 - it went to the underwriters and everything was agreed but was told their surveyor was still to visit property. Then, first thing one Monday morning, santander telephoned to say that the property was only valued at £270,000 and that we had 2 options - get the vendor to reduce or pull out! So we went back to vendor, after stressful negotiation, he reduced it to £280,000 - £10,000 above Santander's valuation. However, Santander still said no and vendor wouldn't reduce further. So we lost that house!
The house had been completely renovated to an extremely high spec and was wonderful inside - just like a new build- but other houses in the area were only selling for £250-260,000 so we can see why Santander thought it was over valued, however, what we don't understand is why Santander felt lending us £238000 was a liability when it is clear they would easily get their money back on the property if it was repossessed! Please can someone tell us why as Santander just tell us it's overvalued!

kingstreet

Is the lender treating the property as a newbuild?

The house had been completely renovated to an extremely high spec and was wonderful inside - just like a new build

Santander maximum loan to value on a newbuild is 85%, so a valuation of £270,000 means a maximum loan of £229,500.

Definition of newbuild;-

This relates to all new build/converted properties including affordable housing such as shared ownership. We define new build as any of the following:

Property built/converted within the last 12 months (i.e. based on the date of the completion certificate).

Property has not been previously occupied (for converted properties - that is since the conversion has been undertaken)

Property is being sold/marketed by a builder or developer

Where the property is within a development that was once used for commercial or other use, i.e. not previously used for residential purposes.

Grssal

many thanks. using your information re: definition of new build - the house has been converted in the last 12 months and the vendor is a property developer - so it must be for this reason - however, Santander did not say this. We offered to put more down ie £60,000 on purchase price £280,000 but Santander said it didn't make any difference - the house was still over valued!

amnblog

Someone has their wires crossed.


If Santander agreed to lend you £238,000 on a £288,000 valuation they will lend you £220,000 on £270,000 with a £50,000 deposit.

SamDunham

I am in no way an expert on mortgages but from my own personal experience, dealing with Santander directly was an absolute nightmare. We enlisted the help of a broker and feel so much more confident having them be able to deal with the lender for us. They're experts at it and they're there to help you. Maybe you could ask a broker for help?

Grssal

If we could have got the vendors to reduce the house to £270,000 Santander would have lent us £230,000 - however, the vendor would not budge lower that £280,000 so Santander would not lend anything! It did not matter how much we offered to put down - Santander still wouldn't do it. We asked our solicitor to speak to Santander to get clarification and they wouldn't speak to her - so we have given up now! Over 2 months wasted.

Grssal

Thanks Sam - that makes me feel better. We have now gone to a broker who is positive that he can get us a mortgage on that house. We wouldn't mind, we only went to Santander direct because - they said come to us we could offer you a real good deal as we currently bank with them and have our old mortgage with them. wish we had steered clear now.

Thrugelmir

Grssal wrote: »

The house had been completely renovated to an extremely high spec and was wonderful inside - just like a new build-

The value of the spec is subjective in terms of the of the property itself. Like a car depreciates once driven off a garage forecourt.

when it is clear they would easily get their money back on the property if it was repossessed!

Common misconception. Not the way lenders view mortgage lending. As the true commercial cost of repossession is never recovered.

SamDunham

Ha! They said the same to us because we bank with them. Brilliant isn't it? Really hope everything works out for you now keep us all updated

amnblog

Surely Santander will lend you £229,500 and you can put in £50,500?