HSBC valuation - meet in the middle?

Sheep

Hi all

We have just found out the HSBC valuation for our remortgage has come back 10k below what I was expecting. At first I was upset because I thought we have just gone through all the process for nothing but then realised this would put us at 88% LTV so could still go for a 90% product... great i thought as still lower than what I am paying now.

Here is the problem. The house was a new build when we bought it and HSBC still class it as a new build for the first 2 years and have a max LTV on new builds of 85%. We completed on our house in Dec 15 however exchanged in on 31st August 15 and thatd when my 2 year fixed with Leeds is up.

I have just had a call from the underwriter to say a valuation team will call me next week to look at how we can best proceed and 'meet in the middle'. Im wondering what this 'meet in the middle' actually means? They downvalued it by 10k however if they downvalued it by 5k we could still go for the 85% mortgage. Is this what she was implying? Have i just misread the conversation? Anyone experienced this with lenders?

If they stick to the 10k down valuation are they really going to make me cancel the whole thing and apply again in 6 months for the sake of it? They have paid for the valuation etc and im sure wont want to pay for another one shortly.

Really appreciate your comments

Keezing

Let us know how you get on, Sheep. My understanding of their criteria indicates that this should be a decline:

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We define a new build property as one that will be occupied for the first time and/or has been built and completed within the last 24 months.

Although we can approve mortgages on properties not yet built subject to satisfactory valuation, we will not release funds until the property has been completed. A re-inspection may be required if the surveyor advises one is necessary in their original valuation.

Standard lending criteria apply subject to:

A minimum £25,000 deposit for properties valued over £100,000 (where the LTV is over 75%);
A maximum 85% LTV (for houses, flats and FTBs)
A structural defects warranty being in place

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It's possible that the "meet in the middle" phrasing was for you to make up the difference in your deposit/equity with additional funds to get you to the 85%. Do you have the option to pay off more of your mortgage with your current lender to increase your equity?

It would be good to know if they offer you some flexibility.

Sheep

Hi, thanks for your reply. I will certainly let you know over the coming week. Unfortunately I dont have the 5k needed to make up the difference so id be surprised if this does go anywhere. I did call them before even starting the application and the guy said because we live in the property now we can go up to 90% which i now know to be incorrect.

dunstonh

The house was a new build when we bought it and HSBC still class it as a new build for the first 2 years and have a max LTV on new builds of 85

Ignoring market conditions, new builds tend to lose money the minute someone else has lived in them long enough to have some wear and tear. So, there is a good reason for them taking this view.

I have just had a call from the underwriter to say a valuation team will call me next week to look at how we can best proceed and 'meet in the middle'. Im wondering what this 'meet in the middle' actually means? They downvalued it by 10k however if they downvalued it by 5k we could still go for the 85% mortgage. Is this what she was implying? Have i just misread the conversation? Anyone experienced this with lenders?

They will consider your overall application and how you stack up. If you have a number of things going for you, they may be prepared to allow another area to be a negative against you. If you are already pushing limits in other areas and there are few positives then they may not budge. It is all a judgement call by the underwriter based on the information they have.

As the valuation has come back lower, you can go back to the estate agent and tell them this and revise your offer downwards.

Sheep

Thanks for that. It is a remortgage so no EA involved. I would be happy to take the 90% deal as there isnt a huge amount of difference. Just annoyed that they have accepted all my application and now potentially i will have to do it all again in 6 months