Loan-to Value Calculation

Heather2012

Hello,

I have a question about loan-to-value.

If a house is worth £100,000 but sells for £90,000 is the loan to value based on the actual value of the house (£100,000) or the sale price (£90,000)?

Thanks,
Heather

kingstreet

Always the lower of purchase price or valuation.

However, if buying as a sitting tenant or from a close relative, a concessionary purchase can see value not reflected in the agreed price being used as deposit, so there is a contradiction to the rule.

Heather2012

Thank You