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Reducing Offer - Impact on Mortgage

SavvySaver24
SavvySaver24 Posts: 196 Forumite
Seventh Anniversary 100 Posts Name Dropper Combo Breaker
in House buying, renting & selling
After our survey results we have reduced our offer on the property we were buying (still waiting to hear back on where we get to with negotiations). However our Broker has flagged that if we reduce our offer, our lender will have to be made aware and they MAY amend the amount they are willing to lend as a result. It doesn't sound like it will be a drastic change, but can anyone share their experiences of their lenders response when they change the purchase price?

Comments

  • eddddy
    eddddy Posts: 18,698 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    You certainly have to make the lender aware - and if you hit the LTV limit, they'll reduce the amount they will lend.

    For example,

    If your chosen mortgage product has a maximum LTV (Loan to Value) of 85%...
    • You might have offered £105k with a mortgage of £85k - That's an LTV of 81%, so that's all fine
    • But if you reduce your offer to £95k still expecting a £85k mortgage - that would be an LTV of 89%, so that wouldn't work.
    • If you reduced your offer to £95k (with 85% LTV) the most you could borrow would be £90.75K
  • SavvySaver24
    SavvySaver24 Posts: 196 Forumite
    Seventh Anniversary 100 Posts Name Dropper Combo Breaker
    It won't change our LTV band, it is currently 82% and most it will go to if we reduce our offer is 84.7%. So they shouldn't reduce it unless out LTV band changes?
  • eddddy
    eddddy Posts: 18,698 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    SavvySaver24 wrote: »
    It won't change our LTV band, it is currently 82% and most it will go to if we reduce our offer is 84.7%. So they shouldn't reduce it unless out LTV band changes?

    So are you applying for an 85% LTV product?

    Reducing your offer shouldn't suddenly result in the 85% LTV product no longer being available to you.
  • SavvySaver24
    SavvySaver24 Posts: 196 Forumite
    Seventh Anniversary 100 Posts Name Dropper Combo Breaker
    It is an 80 to 85% LTV product yep. Ok thanks you have put my mind at ease ha.
  • Throwaway1
    Throwaway1 Posts: 528 Forumite
    Eighth Anniversary 500 Posts Combo Breaker
    SavvySaver24 wrote: »
    It is an 80 to 85% LTV product yep. Ok thanks you have put my mind at ease ha.


    Couldn't you just pay the same amount in deposit anyway so you'd actually be borrowing less if you reduced your offer? That way you could even end up in a better LTV bracket.
    MFW - OP 10% each year to clear mortgage in 10 years!
    2019: £16,125/£16,125
    2020: £14,172.64/£14,172.64
    2021: £12,333.62/£12,333.62
    2022: £10,626.55/£10,626.55
    2023: switched tactics to saving in a higher interest rate account than mortgage interest rate
    2024: mortgage neutral!
  • eddddy
    eddddy Posts: 18,698 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Throwaway1 wrote: »
    Couldn't you just pay the same amount in deposit anyway so you'd actually be borrowing less if you reduced your offer? That way you could even end up in a better LTV bracket.

    I guess it depends what the problem with the survey is.

    If it's identified a problem that the OP will need to deal with very soon after purchase, the OP might want to pay a smaller deposit, so they have cash available to pay for it.
  • SavvySaver24
    SavvySaver24 Posts: 196 Forumite
    Seventh Anniversary 100 Posts Name Dropper Combo Breaker
    ^^ yep that is the case. We need to free up some of our deposit to pay for the required works.
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