Help to Buy Undervalued

LittleFawn

I am purchasing a help to buy property with purchase price of 145k.
The banks valuer came back with 135k.
I am using the HTB scheme and 5% deposit.
My mortgage advisor told me that if the valuation comes back under, then I’m basically screwed.
My question is: Does the HTB scheme count for the purchase price of the property or the actual valuation price of the property?
I already have the ATP (authority to proceed) from the HTB scheme for the full 145k purchase price.
Which means:
Purchase price 145k
5% Deposit 7250
15% gov 21750
Mortgage price 116k

So the bank are willing to give me a mortgage of 116k. Which is under their valuation of 135k.
Basically do I need to worry becuase I already have the ATP?
Is the bank trying to scare monger me so I get a bigger mortgage?
Does the HTB count for purchase price or valuation price?
(I havnt signed anything yet)

nubbins

I would have thought you you need to find another 10k or find a lender/valuer that will value the property for 145k.

LittleFawn

The builders have included an incentive worth around £3k.
Which I didn’t actually ask for or need (okay so 2 TV’s are better than one but I already have all my stuff)
I’m going to ask to have this taken off.

csgohan4

so your buying an overpriced property, either you give the builder an option to reduce their price or you walk and remind them other buyer's will have the same problem if they need a mortgage

Gwendo40

nubbins wrote: »

I would have thought you you need to find another 10k or find a lender/valuer that will value the property for 145k.

OR you ask the vendor to reduce the price accordingly.

HampshireH

If it's an incentive worth 3k why would having it removed reduce the price? Or are you suggesting it will reduce the value?

Sorry it's early & the brain probably hasn't woken up yet but incentives are usually freebies to get you to buy? If they aren't then you would have had to sign to confirm payment

csgohan4

don't forget for a new build as soon as you step in, the house may drop further in value

Tiglet2

My daughter is having this exact problem with HTB new build and a 5% deposit. Apparently us/in laws gifting an additional £10k to fill the gap is not sufficient. The lender has to value the property at the asking price. My daughter is now anxiously waiting for the outcome on her third lender's valuation. If this doesn't work, then she will have to find another cheaper "older" property without the HTB element. My heart bleeds for you - it seems that this so-called government help is no help whatsoever.

lookstraightahead

Sorry I do not know a lot about HTB but could you not just advise the seller to reduce the price as it is obviously not worth what it is being sold for? Happens with all properties not just HTB

Tiglet2

Problem is that developers are reluctant to reduce their prices, especially when other plots have been sold at their inflated prices without any problems (maybe because the LTV is better on those properties, so lenders are not so jittery about getting their money back if the purchaser defaults). My daughter's developers have refused to reduce the price on her new build and, in fact where they are continuing onto Phase 2, the same house is now selling for more than hers is. Obviously on older properties the price is negotiable, but new builds rarely are. You may negotiate "extras" but it won't reduce the asking price.

LittleFawn

I agree I don’t want to buy an over priced property but I thought 10k on a 145k flat is excessive.
I think the incentive pack might have something to do with it. They insisted that it was included when I didn’t even know I was getting it. To be honest I don’t want it.
I’ve phoned the builder and they said they would contact their head office but I’m just so scared I won’t get this.