Mortgage valuation less than purchase price

twink1108

We are buying a new build house from Taylor wimpey using HTB equity loan. We are semi forced into using HTB (and subsequently needing to find a new build) because we can't afford anything more than around £400k without this, and in the local area, that won't get much more than a small 2 bed flat. We used this scheme to buy our first home, a 1 bed flat, and have benefitted greatly from using it so are happy to do so again.

Anyway, nationwide have been to value the property and have valued it at 560k, but the purchase price is 600k. TW are HIGHLY unlikely to lower the price as there are currently people camping outside the development office for the next phase to launch this week (my partner camped for 3 nights!). Do you think this is something I need to be concerned about? We are likely to stay in the house for a significant amount of time as it's big enough to expand our family so wouldn't be selling any time soon.

marliepanda

Well. As nationwide are 40K short of what you want, where's that 40k coming from?

twink1108

They're not changing their lending criteria and we can still get a mortgage to cover us up to £600k but they've just valued it as less than we're buying for. I don't really know what it all means but I have been reassured by my mortgage advisor that they're still lending us the same amount.

Paully232000

I may have this confused, but you think the mortgage company are giving you are mortgage for more than they think the house is worth?

BLOW_FLY

Paully232000 wrote: »

I may have this confused, but you think the mortgage company are giving you are mortgage for more than they think the house is worth?

That's the way I read it too.

Would like to see how that is going to work.....

BF

twink1108

We are borrowing 40% on the equity loan - £240k
Putting in £80k of our own money
Remaining £280k is coming from nationwide.

Does that sound right? Im genuinely asking for advice on this and not looking for patronising comments please as I'm concerned as to whether or not we should go ahead with the purchase. Perhaps because our 80k is more than the 5% deposit required through the HTB loan scheme they are allowing us to do it? I'm really not sure.

LKRDN_Morgan

Think you need to double check with your MA because something doesn't sound right. The lender isn't going to give you more than the house is worth

twink1108

I've just checked with my mortgage advisor and she said it's because we have the help to buy loan which counts as a large chunk of our deposit.

Paully232000

twink1108 wrote: »

I've just checked with my mortgage advisor and she said it's because we have the help to buy loan which counts as a large chunk of our deposit.

Did he tell you what the new figures are for your calculation as above;

"We are borrowing 40% on the equity loan - £240k
Putting in £80k of our own money
Remaining £280k is coming from nationwide".

and is the mortgage % and monthly payments the same?

glosoli

I would be surprised if the help to buy element is not being reduced accordingly, i.e:

Purchase price - £600,000,
Mortgage valuation - £560,000,
Help to Buy Loan - £224,000 (40%)
Mortgage from Nationwide - £280,000

Therefore total borrowing : £504,000,

Deposit (from the mortgage perspective) - £56,000,
Remaining amount to make up full purchase price to give to solicitor - £40,000,

Initial loan to value 87%,
New loan to value 90%, but with a £16,000 shortfall,

Unless Nationwide increased their borrowing by £16,000, to make it a loan to value of 93%.

Don't normally deal with Help to Buy mortgages so I may be missing the point entirely...

glentoran99

glosoli wrote: »

I would be surprised if the help to buy element is not being reduced accordingly, i.e:

Purchase price - £600,000,
Mortgage valuation - £560,000,
Help to Buy Loan - £224,000 (40%)
Mortgage from Nationwide - £280,000

Therefore total borrowing : £504,000,

Deposit (from the mortgage perspective) - £56,000,
Remaining amount to make up full purchase price to give to solicitor - £40,000,

Initial loan to value 87%,
New loan to value 90%, but with a £16,000 shortfall,

Unless Nationwide increased their borrowing by £16,000, to make it a loan to value of 93%.

Don't normally deal with Help to Buy mortgages so I may be missing the point entirely...

I would make it


Help to buy- 224k
Own Money - 80k
Nationwide - 296k 52% (give or take) LTV not 93%