Low valuation... gutted, what to do?

Waffle_On

The next thing I would be doing at this stage is looking at other properties marketed by the same agent as handling this one and making appointments for viewings. An agent with his clients best interests in mind will tell them you're looking elsewhere, and that may encourage them to reconsider - if not you may find somewhere better.

Debtslayer

CrippsCorner wrote: »

Well we went in at the valuation price (reminder: £10,500 less than the agreed price)

They came back with £183,000 (basically half way)

We said £180,000 maximum, and it was rejected. Now having a heavy thought on what to do! It's not that much more, but I'm concerned we're only looking to be there for 3-5 years and might well make a loss on the place.

Personally I'd hold out. Say offer of 180k is it and look at other properties. Pretty good chance landlord would come round to accepting. Can't see them losing sale over 3k when he could potentially have it sitting empty while trying to sell and still having same issue when next buyer gets a valuation
But it really depends how much you want it.
Although you say you only intend to live there for a few years so it's definitely not worth paying over what it's worth as you won't get anything back when you sell in a few years time. (Dependant on house prices increase / decrease in your area)

CrippsCorner

They came back to accept £180,000 estate agent said the seller now has their heart set on their new place and is already invested into that so doesn't want to lose our sale... I'm happy with that tbh, it's gone 75% our way at the end of the day!

Question is... I'm a bit lost now.

So Nationwide will only lend us £150,875 to keep the 85% LTV (with the property being 'worth' £177,500)

Our deposit is £28,200.

Does it mean we basically have to give the sellers £2,500 outside of the mortgage agreement? Because if you make the property value £180,000 on the mortgage, I need to borrow more to make up the 85% (which they won't do) or I thought adding the £2,500 to the deposit would be it, but then the LTV is 83.06% :think:

I'm probably being really thick...

Ktaylor86

The LTV is still 85% according to the mortgage company. You put the £2500 extra in the deposit as 'cash'. OR if you borrowed the £2500 your LTV would go up, and potentially you would not be eligible for the mortgage terms (interest rate etc) that had been agreed. So to maintain your 85% LTV you need to contribute more in cash.

Remember as far as mortgage company is concerned it is not worth more than £177,500 so all LTV calculations are based on that figure.

tlc678910

Hi,

EDIT: I have just seen your update in post 24 - good luck with the purchase!

I would urge you to look at other properties online and in the flesh to make sure that the property that you are renting is the one that you would like to buy and is not overpriced.

This was a property you chose to rent as a couple but is it still the type of property that you would choose as parents? You mention that you would expect to move in 3-5 years - is there anything more suitable within your reach now? enough bedrooms, little garden, playroom? nice school nearby?, near to family? (i don't know where you are buying but in some areas your budget would buy a lot in terms of a family home).

Please don't overpay just because you can't really be bothered to move. You will likely be paying for over a year before you pay 5K off your mortgage as in the beginning most of what you pay is interest. That is over a year of payments - a lot of your time and money - before you recoup that overpayment and would be likely to get your money back if you sold. That is fine for a forever home but to live there for three years? Don't do that for the sake of saving on a removal van and a couple of days hassling around moving.

If you do want to buy your property I would think your position is very strong as no-one else will be willing to buy it until the landlord gets vacant possession I wouldn't think, so stick to your guns. You can still be super polite but clear that you would like to buy it but you can't afford to pay more because you are reliant on a mortgage simple as that. Your landlord could well have an interest only buy to let mortgage at £500 a month in which case that is what delays are costing them. You will not have to leave in April - you still have rights as a tenant even if your landlord wants to sell. Landlords have to give 2 months notice before they can seek possession

Good luck
Tlc

Ktaylor86

CrippsCorner wrote: »

They came back to accept £180,000 estate agent said the seller now has their heart set on their new place and is already invested into that so doesn't want to lose our sale... I'm happy with that tbh, it's gone 75% our way at the end of the day!

Question is... I'm a bit lost now.

So Nationwide will only lend us £150,875 to keep the 85% LTV (with the property being 'worth' £177,500)

Our deposit is £28,200.

Does it mean we basically have to give the sellers £2,500 outside of the mortgage agreement? Because if you make the property value £180,000 on the mortgage, I need to borrow more to make up the 85% (which they won't do) or I thought adding the £2,500 to the deposit would be it, but then the LTV is 83.06% :think:

I'm probably being really thick...

Further to this and my post above and after doing some sums I can understand why you are confused!! I have confused myself! :eek:

But the confusion is that your deposit of £28,200 is higher than it needs to be if you are going for 85% LTV on the basis of a value of £177,500. However you wish to pay £180,000.

When it comes to exchange/completion you pay the solicitor your deposit, the solicitor receives the money from mortgage company and on completion pays both deposit and money from mortgage to seller.

SO you will have:

£28,200 from deposit
£150,875 from mortgage co

Total of £179,075. so you are £975 short which will need to be added to your deposit funds taking you from £28,200 to £29,175

Phew think that sorts it... confused myself there (only bought for first time in 2013!!)

CrippsCorner

Thanks. We have debated it many times! Funnily enough, 3 months before it went up for sale, we actually contacted the estate agents to tell them if the owners ever fancied selling, could they please consider us first as we're very interested in buying it! I'm sure that shows how much we like the place

5 years down the line we hope to apply for a house, however at the moment we're looking at a minimum of £50k on top of what we're paying really. Whilst we could technically afford it, with it going down to one income shortly, we don't want the financial risk.

I'm happy to add the money in as cash, I do not want the LTV to increase. It's going to be tight but I can just about manage it. I'm still not quite sure how this works, as I said adding £2,500 to our deposit still leaves us 1.94% short. I'll get back in touch with my adviser; guess that's what he's there for!

Debtslayer

Congratulations :j

Glad landlord finally saw sense.
Fingers crossed remainder of purchase goes as smooth as possible for you

CrippsCorner

I guess the topic title should be changed! Not so gutted after all...

Working it out now I have the figures, because the deposit's gone down in line with the renewed purchase amount, I am actually only paying £925 more than before, and in turn our monthly payments have decreased by £35.

I wonder if we'll get a new Keyfacts report? Would be interested in seeing all the differences.