Loan To Value

SaveyMcSaveface

Hello

I am currently buying a house. It is currently above asking price by £10,000 on my offer. Others in the area have gone for the amount we have offered and more! So still a good deal.

What I am looking to know is in regards to my mortgage. If the house is on the market for £240,000 and my offer is £250,000. Is my mortgage loan to value based upon the £240k(assuming agreed by the bank) or the £250k? As in is a 10% deposit £24K + £10K or is it just the £25K?

Many thanks,

Steve.

Annisele

The "value" in "loan to value" is the lower* of:

• the bank's valuation
• the amount you agree to pay for the property.

So in your case, if the bank agrees the property is worth £250k, then a 10% deposit will be £25k.


If the bank says the property is only worth £240k, then on a 90% LTV product they'll only lend you 90% of £240k (i.e. £216k). In that case, you're absolutely right - you'd need to come up with £34k cash towards the purchase.


(*There can be special rules if you're buying from a connected person - eg a close family member. Sometimes the bank will agree to take its valuation as the "value" part in the LTV calc even if the purchase price is much lower. But if this is a normal sale, on the open market, then the bank will take the lower figure).

dimbo61

The Lender will send out a surveyor and he/she will value the property on behalf of the lender.
If they say the property is worth £240,000 then that is the value the Lender will base there mortgage offer on.
Not the value the Vendor thinks it is worth or the estate agents or you.
If you are looking at a 90% mortgage and they value the property at £240K you need 10% of £240K and £10,000 plus stamp duty and other costs

SaveyMcSaveface

Thanks both, that is exactly what I was wondering