Mortgage Offer 2.5k short of buying price

YoungBaker

Hi there

We have an made an offer on a property and have heard back from our prospective lender today that they will offer us a few grand short of what we need (2.5k) as they will take my student loan into account (broker didnt seem to think they would).

I'm wondering what our options are here? I understand them as follows and wondering if anyone had done anything similair:

1. Increase our deposit and put the extra 2.5k in ourselves.
2. Check out another lender.
3. Reduce our offer by 2.5k (We are buying a new build).

Has anyone had a similair situation and if so any experience you can offer? Is it worth asking the House Developer if they would consider a lower price based on this or would this only be done if the valuation came back low?

Thanks

nidO

You can ask your vendor if they'll accept a lower price, if they say yes though basically all it means is that you didn't negotiate hard enough first time round.

They don't directly care that your mortgage offer came back low, if a valuation is low they might care to some extent because if your valuation is low other prospective buyers' might be too which could leave them with a hard-to-sell house, in your case though your problem is your affordability not the value of the house, so they're only likely to agree to drop the price if they don't think they can readily sell the house to someone else for the higher price, and if you pushed hard when originally offering you would already be at this "floor" price.

Is finding the extra £2500 out of your own pocket actually feasable? If the mortgage offer you've had is the best for your circumstances (leaving aside the shortfall) finding a way round the shortfall without going to another lender with looser afforability criteria might be the better option.

Thrugelmir

How long will it take you to find the additional £2.5k?

YoungBaker

Thanks both for your replies.

We would be able to get the 2.5k together so it should not be a show stopper, but I'm just waiting to hear back from our solicitor to discuss options and was just wondering if this was a scenario anyone else had found themselves in.

I take on board your point about if the developer did accept a lower offer now then we did not negotiate enough in the first place - which is fair. However it was a new build property and we felt the price was fair so am just wondering if anyone had done anything similair or how 'bad' it would look to the developer if we turned round at this stage to lower our offer (due to affordability).

Thanks

kingstreet

YoungBaker wrote: »

We have an made an offer on a property and have heard back from our prospective lender today that they will offer us a few grand short of what we need (2.5k) as they will take my student loan into account (broker didnt seem to think they would)

Wow, that was well researched.

A broker should not submit an application to a lender until satisfied that the application fits the lender's criteria and affordability 100%.

Off the top of my head I can't think of a lender which won't make a deduction for student loan payments if they are visible on your payslips or bank statements.

looknohands

kingstreet wrote: »

Off the top of my head I can't think of a lender which won't make a deduction for student loan payments if they are visible on your payslips or bank statements.

How do you mean? As in anyone with a student loan always has a deduction in their offer from amount applied for? Or a deduction from their max lend? started me worrying now....

kingstreet

When you enter things in the affordability calculator, one of them should be student loan payments, so your borrowing power reduces.

Usual suspects;-

loan payments
hire purchase payments
lease payments
credit card balances (or 5% of balance as monthly payment)
student loan payments
maintenance costs
school fees/childcare costs
ground rent & service charges
travel season ticket/loan payments.

looknohands

So SL decreases max loan affordability, it doesn't automatically create a shortfall on offer to value for anyone with Student Loan. If you're well within the affordability this shouldn't happen?

kingstreet

looknohands wrote: »

So SL decreases max loan affordability, it doesn't automatically create a shortfall on offer to value for anyone with Student Loan. If you're well within the affordability this shouldn't happen?

Shortfall on offer to value?

Er, I think the answer to your question is no, but suggest you contact your professional advisor for clarification.

Affordability means you stick your income and outgoings in the calculator and it tells you what you can borrow, nothing more, nothing less.

looknohands

Sorry I have a student loan and am worried at what you've said. I'm well within max affordability from lender (by 50k) but will they automatically knock a percentage off of any offer they give me due to student loan?

kingstreet

looknohands wrote: »

Sorry I have a student loan and am worried at what you've said. I'm well within max affordability from lender (by 50k) but will they automatically knock a percentage off of any offer they give me due to student loan?

No. It doesn't work like that.

Go in your lender's online affordability calculator.

Enter the income the way it asks.

Enter the outgoings the same way and include the student loan payments.

Job done.

Have you actually sought professional advice? This place is not a way of getting free advice and going direct based on what you are told here.