Mortgage valuation less than purchase price

GDB2222

Cakeguts wrote: »

I am not sure about not being able to buy anything without the HTB. New property has a big premium on it and HTB lets the developers put on an even bigger one. The risk is that you won't be able to sell without making a huge loss.

I suppose that's partly reflected in the £40k the valuer has down-valued by. It's interesting that the HTB limit in England is £600k, and that's exactly the price this house is being sold for.

I'm in London, and the house price pressure cooker has definitely come off the boil in the last year. I'm not sure I'd take the risk the OP is taking.

You can buy a 3/4 bed house in my area for under £600k, but not for £400k, which is the OP's budget without the HTB. The problem is, who is the OP going to sell to eventually when she wants to move on? They won't have the benefit of HTB, as it will then be secondhand, and there's loads of choice for people with a budget of £600k.

I think the OP should have a hard think with her OH about what the valuation is telling them. Sure, her OH has camped out for 3 days, and there are other people camping out for even longer, but now's the time for a really hard reality-check.

Take a look at what's around for £600k on the non-HTB market, and compare that with what you're buying.

AndyBSG

twink1108 wrote: »

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.

How does that work?

The HTB scheme is for first time buyers but you're saying you've used it in the past... meaning you are no longer a first time buyer so not eligible to use the HTB scheme?

kingstreet

AndyBSG wrote: »

How does that work?

The HTB scheme is for first time buyers but you're saying you've used it in the past... meaning you are no longer a first time buyer so not eligible to use the HTB scheme?

HTB Equity Loan isn't FTB only.

To the OP - when the HTB Agent sees the valuation, you will be asked to re-submit a revised PIF as you will get 40% of the valuation, not 40% of the original purchase price.

saajan_12

twink1108 wrote: »

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

So it's simple really: Nationwide lending 280k, they believe value is 560k
=> LTV = 280k / 560k = 50%

Whether you get more money from an equity loan and pay more money to the vendor is irrelevant to Nationwide at least (assuming Nationwide have the first charge and are comfortable with any repayments as a result of the equity loan.

saajan_12

twink1108 wrote: »

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

So it's simple really: Nationwide lending 280k, they believe value is 560k
=> LTV = 280k / 560k = 50%

Whether you get more money from an equity loan and pay more money to the vendor is irrelevant to Nationwide at least (assuming Nationwide have the first charge and are comfortable with any repayments as a result of the equity loan.

twink1108

kingstreet wrote: »

HTB Equity Loan isn't FTB only.

To the OP - when the HTB Agent sees the valuation, you will be asked to re-submit a revised PIF as you will get 40% of the valuation, not 40% of the original purchase price.

Is that the case even though the valuation was for Nationwide's benefit, not the HTB lenders?

The rest of the houses have launched today at exactly £600k again. All have been snapped up already.

Cakeguts, with regard to disbelieving that we cannot buy without, we know our area and are aware of the costs. I see little sense in moving from a one bedroom to a small two bedroom flat (all we could afford with the £400k budget) when we have children to cater for/house.

Cakeguts

twink1108 wrote: »

Is that the case even though the valuation was for Nationwide's benefit, not the HTB lenders?

The rest of the houses have launched today at exactly £600k again. All have been snapped up already.

Cakeguts, with regard to disbelieving that we cannot buy without, we know our area and are aware of the costs. I see little sense in moving from a one bedroom to a small two bedroom flat (all we could afford with the £400k budget) when we have children to cater for/house.

So what that means is that if you need to sell the help to buy property it will be bought by someone who can only afford the 400k budget because help to buy is only available on new builds. So you are looking at making in the region of a 200k loss if you try to sell next week.

kingstreet

To obtain the Authority To Exchange (ATE), your solicitor has to submit copies of the mortgage offer and the valuation to the HTB Agent and the figures have to match what's on the PIF & Reservation.

When they don't the case will be knocked back for amendment.

The Government isn't particularly hot on the idea of giving a 20% equity loan when the valuation is lower than the purchase price.

It's happened to us a couple of times in the last couple of years where the property has been downvalued. We had to submit revised PIF & Res and then these were followed up with valuation and offer which agreed with the new submissions.

Ask your solicitor if this isn't their first HTB Equity Loan case.

twink1108

Cakeguts wrote: »

So what that means is that if you need to sell the help to buy property it will be bought by someone who can only afford the 400k budget because help to buy is only available on new builds. So you are looking at making in the region of a 200k loss if you try to sell next week.

I don't understand your reasoning on this when like for like 4 bedroom houses in the area are selling for around £550-600?

twink1108

kingstreet wrote: »

To obtain the Authority To Exchange (ATE), your solicitor has to submit copies of the mortgage offer and the valuation to the HTB Agent and the figures have to match what's on the PIF & Reservation.

When they don't the case will be knocked back for amendment.

The Government isn't particularly hot on the idea of giving a 20% equity loan when the valuation is lower than the purchase price.

It's happened to us a couple of times in the last couple of years where the property has been downvalued. We had to submit revised PIF & Res and then these were followed up with valuation and offer which agreed with the new submissions.

Ask your solicitor if this isn't their first HTB Equity Loan case.

It's actually the London HTB with 40% of the loan so even more so - I am waiting to hear back from my solicitor this afternoon. They are the recommended solicitor for the developers (again, possibly not the wisest choice, I don't really know) so they are surely going to be coming across other instances like this with other plots on the site.