Borrowing a lump sum via the mortgage

robert_wynne_jones

Hi

Bear with me on this as I'm completely unsure of all the ins and outs of mortgages as I'm a first time buyer.

We've just had a full house survey that's flagged up some major issues (sagging ceiling due to removal of supporting wall). Essentially the surveyor thinks the house is worth £9k less than the price we were accepted for (£119k). The bank has also okayed the mortgage with a 10% deposit (so £107,100). He was pretty shocked the bank valued it at that price in the first place.

It looks like we'll be walking away but first I'd like to try to get a reduction in price. If the vendor accepted £9k less than what was granted (I honestly doubt they will!) - could we then lend that as a lump sum from the bank?

Essentially we don't have the money up front to do the building work required.

Thanks

ACG

You have to put in a deposit. Depending on the lender that may be 5 or 10% as a minimum of the lower of the purchase price or valuation.

robert_wynne_jones

As mentioned, we have a deposit of 10% for the £119k price.

I'm just wondering if we can get a reduction on the price as per the surveyors advice and then borrow the £9k as a lump sum?

Thrugelmir

No one can give you an answer to that question. On the balance of probability more likely a negative response. If a positive, then rate of interest on offer may be higher than you are willing to pay.

amnblog

No you cannot borrow what you are not paying.

If you are 'walking away' anyway, why the question?

Quite frankly is the removal of a supporting walk has damaged the structural integrity of a ceiling I wouldn't touch it with a barge pole.

Annisele

robert_wynne_jones wrote: »

We've just had a full house survey that's flagged up some major issues (sagging ceiling due to removal of supporting wall). Essentially the surveyor thinks the house is worth £9k less than the price we were accepted for (£119k). The bank has also okayed the mortgage with a 10% deposit (so £107,100). He was pretty shocked the bank valued it at that price in the first place.

It looks like we'll be walking away but first I'd like to try to get a reduction in price. If the vendor accepted £9k less than what was granted (I honestly doubt they will!) - could we then lend that as a lump sum from the bank?

In short, no.

It sounds as though the bank has accepted you for a 90% LTV (loan to value) product. The V in LTV is the lower of the bank's valuation and the price you pay for the house*.

(*There are some exceptions, eg if you're buying from a close relative - but it doesn't sound like they apply here. )

So, if the vendor agrees to drop the price by £9k to £110k, then the maximum the lender will lend you is 90% of £110k, or £99k.

Since you have £11,900 cash, you could still afford to buy the place. But if you needed to borrow to put it right, you'd be doing that borrowing on credit cards or a personal loan, not on your 90% LTV mortgage product.

If you can find a 95% LTV mortgage product, you might be able to borrow a little more.

But I think all of that is irrelevant. Whether I could afford it or not, I'd still walk away from a property that had had one of its walls yoinked! That sort of project is for people who know what they're doing, and unless you are one of those people you're going to get ripped off.