Sale Price or Valued Price

flumper

Good Evening

I’m after some advice.

We are in the process of purchasing a new property - this is the first house to be sold on the development and is therefore the bench mark for the other properties on the site.

The purchase price is £500k, but our mortgage provider has carried out a valuation for £400k - with a new property we need an 85% loan to value ratio. We have had an independent valuation carried out which has come in at £450k, so have agreed with the builder a contribution to our stamp duty and extras as an incentive for us and therefore keeping the sale price at £500k, which he is obviously keen to do.

However, our mortgage broker has informed us that despite this the sale price will be recorded as £400k on paper... Is this correct?

Many thanks!!!!!

getmore4less

If you can only borrow 85% of £400k do you have the £160k to make up the difference?

Thrugelmir

flumper wrote: »

so have agreed with the builder a contribution to our stamp duty and extras as an incentive for us and therefore keeping the sale price at £500k, which he is obviously keen to do.

Smoke and mirrors..........

Doesn't alter the lenders valuation of £400k for mortgage purposes. You'll need to find an alternative lender. Though with £50k of incentives you are going to struggle.

SonOf

However, our mortgage broker has informed us that despite this the sale price will be recorded as £400k on paper... Is this correct?

Your broker is correct. Artificially increasing house prices through rebated incentives was a scam prior to the credit boom. Lots of people lost a lot of money as it immediately put them into negative equity. it was cracked down on. Shame to see it is still being attempted with some developers.

The lender will still use £400k.

New houses immediately lose money when someone buys one. You do expect to pay a little over the odds. However, £100k (25% more) is pushing it to the extreme.

[Deleted User]

The lender will use the 'valuation or the purchase price, whichever is lower'

They will lend 85% of this lower figure

Your purchase price for stamp duty purposes may still be higher than this but the lender will always go on their valuation figure

flumper

Thanks for all your comments.

If we purchased the property for the asking price of £500k, what value would be recorded on the Land registry/Rightmove/Zoopla... This value or the mortgage valuation of £400k?

RelievedSheff

The land registry will record the price that the property sold for.

In our case the land registry records £210k where as with builder incentives and deposit contributions we only paid £180k.

ACG

You can purchase the property for whatever you like. But the lender will lend based on the valuation they had carried out.

On the land registry the purchase price will go down as whatever you purchased it for.

You seem to have pressed ahead with this without getting advice, you have incurred an independent valuation cost for no reason what so ever - unless you are happy to spend £50-100k over the valuation and have the money to fund the difference between valuation and purchase price in addition to the 15%.

I think you probably need to take advice from the people you are paying to work on your behalf (ie the broker). Of course the builder is happy to throw in the stamp duty money, you have agreed to pay £50-100k over what the property is worth.

Paully28

So you are willing to pay £500K for a house which has been valued at £400K, and, given is a new build, is likely to lose money after it is 'new'.

Why would you even consider that? Unless, I suppose, and pushing it, you are guaranteed to be spending a long time in this house.

[Deleted User]

The developer will be bending over backwards for this to be agreed at £500k as otherwise they have every other property being downvalued to look forward to.

If you are desperate for the property, take them for everything you can get

foxy-stoat

If its not one of the big developers then your maximum amount you will be able to borrow will be £340,000, but if there are a lot of incentives then expect that amount to drop.

Look for another lender or wait until the developer lowers the price as this will happen on the next punter. Unless someone has to have this property and has a good cash deposit then they will not sell it at £100,000 over a valuation.