Lender valuation 10k less than purchase price

bumblebee20

I am a FTB with decent deposit , LTV 70% , viewed a property few weeks back ( in london) and made an offer (£495,000 - gone with the asking price) as most check boxes are ticked . seller buying something on chain.

Halifax valuation (level 1 , they said desktop valuation , nobody visited the property) came up with 10k less than purchase price(£485,000. I am confused , my lender thinks worth of the property is10k less than purchase price so i am already on negative equity.

Estate agent pushing me to proceed things quickly , i instructed my solicitor for searches , thinking of arranging a private building survey.

is this valuation solid evidence that property worth 10k less than purchase price and i can negotiate with the seller?

your thoughts most welcome . As a FTB i am bit nervous and dont want to overpay.

Lokolo

Firstly, you need to do a lot more reading!

You are not in negative equity. You have a 30% deposit and the property is worth 10% less. You still have equity. Negative equity is where the amount you have borrowed is more than the valuation.

Next, if you aren't renegotiating now then you should well be! The mortgage company is saying its only worth X. You should, unless this is a forever home that you absolutely cannot lose out, should re-offer X.

X is the amount the bank will base the valuation on. Therefore if you are going for a 70% LTV product, then you will only get a mortgage of 70% of the new valuation. If you still want to purchase at Y (your original offer), you would need to put in more cash, or change your LTV mortgage.

davidmcn

Negative equity is when the property is worth less than your mortgage balance, so no, in your case this wouldn't be negative equity.

You haven't told us what the price is, but I'm guessing at London prices £10k isn't a big percentage? Yes, you can try to renegotiate the price with the seller.

GDB2222

Prices in London are dropping at the moment, and the market is v difficult for sellers. So, yes, renegotiate!

bumblebee20

Thanks for your replies , updated purchase price and valuation price in original post.

Lokolo

The seller isn't going to huff and puff if you re-offer £485k with document proof that the valuation has come back at that.

Just to go the estate agent and re-offer. Attach proof of the valuation if you wish, or don't. Just state the reason why.

If they then reject your offer then come back to us.

davidmcn

OK - bear in mind that a 2% difference is pretty insignificant - valuation isn't an exact science and normal margin for error is +/- 5%. Values can easily change that much during the conveyancing process. So by all means renegotiate but I wouldn't get too concerned about it.

AdrianC

bumblebee20 wrote: »

I am a FTB with decent deposit , LTV 70% , viewed a property few weeks back ( in london) and made an offer (£495,000 - gone with the asking price) as most check boxes are ticked . seller buying something on chain.

Halifax valuation (level 1 , they said desktop valuation , nobody visited the property) came up with 10k less than purchase price(£485,000. I am confused , my lender thinks worth of the property is10k less than purchase price so i am already on negative equity.

Estate agent pushing me to proceed things quickly , i instructed my solicitor for searches , thinking of arranging a private building survey.

is this valuation solid evidence that property worth 10k less than purchase price and i can negotiate with the seller?

your thoughts most welcome . As a FTB i am bit nervous and dont want to overpay.

£495k purchase with 70% mortgage means £346,500 mortgage. (As has been said, you will have damn nearly £150k of equity, not negative equity.)

If the lender value it at £485k, then that doesn't affect anything - except that the lender will view your £346,500 mortgage as being 71.5% of £485k. That might affect the interest rate, but unlikely.

You can always ask to renegotiate, based on the valuation... but the vendor can always refuse. Then what? You'll walk away over £10k on a half million purchase?

Crashy_Time

Are you sure 10k is enough?

lookstraightahead

Op - basically the house is being valued at less than what you are paying. No you won't be in negative equity but you will be using your money and losing it. Also please please do look at what is happening to London house prices at the moment.

I know you don't want to lose the property, but basically you are chucking money away. £10000 is a lit of hard earned money despite what some people say.

bumblebee20

Thanks for your replies , i got a reply from Estate Agent , as expected he is pushing back and said he would recommend other FTB to the seller if i am not committing to agreed purchase price.