What happens to a mortgage if the house cost is reduced?

gtat

Hi all,

I just wondered what would happen if seller accepts an offer, the lender agree a mortgage based on this, but then the price of the house is negotiated and reduced due to required works. Does the original mortgage offer still stand?

So, for example:

An offer is accepted for £200,000, financed by a £30k deposit and a mortgage agreed for £170k at a LTV of 85%

However, work is required, and the house cost is renegotiated to £190k.

As far as i'm aware, there are then two options:
A) Still use a £30k deposit, but reduce the mortgage taken to £160k. LTV is now 84%
Reduce the deposit to £20k, and still take the full mortgage of £170k. LTV is now 89%

So, what would the impact of the two options be on the mortgage offer? Would the offer still stand, despite the change in LTV?

Many thanks.

Let_Us_See

The contractual purchase price will be £190,000 and it is up to you to decide size of deposit - subject to lender's T & Cs. Whichever option you choose a new mortgage offer will be required.

gtat

Let_Us_See wrote: »

The contractual purchase price will be £190,000 and it is up to you to decide size of deposit - subject to lender's T & Cs. Whichever option you choose a new mortgage offer will be required.

Ok, thanks. So this would likely require a new mortgage application, or would it be a case of the current one being tweaked. Presumably there shouldn't be any issues with the lender reducing the mortgage offer?

(FYI this is hypothetical at present, so just preparing ourselves for future possibilities!)

Let_Us_See

Usually, just tweaked!

gtat

Let_Us_See wrote: »

Usually, just tweaked!

Thank you

lazer

This happened me - house price was renogiated and was £6k cheaper

New mortgage offer was required, but the deposit was kept the same and it was a simple process to reduce the loan requested.