house price reduced after the mortgage offer received

sam2015_2

I'm just getting my self ahead.
I've the mortgage offer for xxx amount. In the process of re-negotiating the price now. If the seller agree to reduce the price by say 5k, what should I do in terms of the mortgage offer? Do I need to get the lender to amend the mortgage offer. The borrowing amount and LTV will stay the same, just the house price needs changing.

I know the seller is in a hurry to complete so wouldn't like the idea of me amending the mortgage offer and delay things.

joeistheone

You (and the solicitor acting on behalf of the lender) will need to tell the lender. They will then issue a revised mortgage offer for the reduced purchase price.

ACG

The borrowing amount and ltv can not stay the same, one will have to give.

But yes you can alter the purchase price with the lender providing everyone is in agreement.

itmakessense

I think it is called gazundering, just pay what you agreed to pay!

ThePants999

ACG wrote: »

The borrowing amount and ltv can not stay the same, one will have to give.

I don't understand why they can't. The lender has had a valuation done, surely LTV should calculated against the valuation. If the bank's surveyor tells them the house is worth £400K, and I'm after a £300K mortgage, surely that's 75% LTV whether I'm actually paying £350K, £400K, £450K or whatever - what matters to the bank is surely what they could sell it for if they repossessed, not what I'm buying it for. Otherwise why bother with the valuation at all?

ACG

The lender will lend based on the lower of the purchase price of valuation.

So if the buyer made an offer doe £100k and it was valued at £100k then the buyer wanted a £75k, thats 75% LTV.

If the buyer then decided to purchase the property for £95k (and everyone was in agreement) if you took at £75k mortgage that would be 78.9% LTV. If the LTV was kept the same (75%) then the loan would need to come down to £71,250 so one or the other has to give.

ThePants999

I can't say I'm surprised that things are stacked in the lender's favour, but it seems illogical. "The surveyor thinks it's worth less than you're paying? We'll assume the surveyor's right. The surveyor thinks it's worth more than you're paying? We'll assume you're right."

There was another thread recently about buying a relative's home for well under market value, and the advice given in there was that at least some lenders would use the market value for LTV calculation. Which makes sense - just cos someone's getting a £400K house for £200K doesn't mean it only provides £200K of security to the lender. I don't see a significant difference in this situation, but I'm sure the lenders can justify it to themselves :-)

Edit: found an example

chelseablue wrote: »

I have sold my place to a family member.

It was valued at £250,000 and I am selling it to him for £235,000.

His lender is using the £250,000 value to work out his LTV.

sam2015_2

Thanks for your replies.
The valuation match the offer price but has a condition on it, etc ..hence the reduction.

The deposit and borrowing amount would stay the same. The ltv obviously would change slightly but the product will stay the same. Say, the ltv is 73% now but after the price reduction it'll be 72%. The mortgage product will be 75% ltv one in both.

amnblog

How can the LTV go down if the price falls and the lending level holds?

Check your maths.

sam2015_2

amnblog wrote: »

How can the LTV go down if the price falls and the lending level holds?

Check your maths.

You are right. The ltv will go up if the price drops.

Let's hope I get the reduction first.