Second mortgage valuation lower than agreed sale price and first mortgage valuation

Sarahsky

Hello, new member and looking for a bit of advice on what seems like a bizarre situation.
We found a house last April and started the buying process which included applying for a mortgage. The agreed price was £310000 which we re-negotiated to £305000 after a structural survey. The mortgage valuation came back at the house valued at £310,000 so everything was going well.
Issues arose with the title plans and solicitors side of things (another absolutely bizarre situation) however this FINALLY was resolved last September / November time. However by this time our mortgage offer was coming to an end and because there were some additional queries from our solicitor that hadn't yet been answered by the seller's the offer expires early December. We set about applying again in the December as we were confident we were approaching completion in the near future. Took over a month to sort out because of christmas etc and finally heard this week that our mortgage valuation has come back at £290,000! 20k less than the original valuation 6 months ago. Both were performed by the same bank and the only comment was that they 'felt the house had fallen into disrepair'. Which even if that might be true I can't imagine a scenario where that would wipe 20k off of the valuation.
Anyway we were planning on putting a 15% deposit down but now that the bank will only lend £290,000 we really can't afford to stump the extra 15k as we want to do some alterations in the house.

We have had so many hurdles trying to buy this house it just seems like one more added but we really love the house.
Does anyone have any advise on what we can do in this scenario?
Thanks

davidmcn

Negotiate a reduction in the price? Any indicators of what's been happening in the local market since last April?

Bear in mind valuation isn't an exact science. £290k and £310k are in the same ballpark (£300k +/- 3.33%) even if they weren't carried out months apart. Valuations aren't carried out "by the bank", they're carried out by surveyors, and surveyors can have differing opinions about values or defects in the property.

sgun

Sarahsky wrote: »

finally heard this week that our mortgage valuation has come back at £290,000! 20k less than the original valuation 6 months ago. Both were performed by the same bank and the only comment was that they 'felt the house had fallen into disrepair'. Which even if that might be true I can't imagine a scenario where that would wipe 20k off of the valuation.

We have had so many hurdles trying to buy this house it just seems like one more added but we really love the house.
Does anyone have any advise on what we can do in this scenario?
Thanks

Tell the sellers that as they haven't been maintaining the house then it has now been valued 20k less. It might be that it is small things that they haven't done like clearing gutters, painting fences etc but all that contributes to a house looking like it has "fallen into disrepair". It probably wasn't the same surveyor and they will have a different opinion and will have spotted different things.

pinkteapot

I would phone the EA, tell them the surveyor's comment re disrepair, and ask to view the house again. Obviously it may be things you can't see that a surveyor can, but I'd be sufficiently concerned by that comment to take a look at what state it's in!

eddddy

Is the EA paid on completion?

If so, phone the EA, explain that the house has been down-valued, so you now don't have enough deposit to proceed.

The EA will want to save the sale, in order to get their commission.

So it's likely that the EA will volunteer to call the seller to explain, and see if the seller can be a bit more flexible on the price - but if the EA doesn't volunteer, you can suggest it.

Skiddaw1

pinkteapot wrote: »

I would phone the EA, tell them the surveyor's comment re disrepair, and ask to view the house again. Obviously it may be things you can't see that a surveyor can, but I'd be sufficiently concerned by that comment to take a look at what state it's in!

I'm with Pink Teapot. It would be ringing alarm bells with me.

Sarahsky

Thank you all for your advice. I phoned the estate agent and explained the situation and she's going to speak with the sellers.
I actually went to see the house recently and to be honest I don't think it looks much different than when we saw it months ago. It's not in perfect condition but it is roughly 90 odd years old. It needs a few repairs and a lick of paint but not 20k worth, although this will be our first house purchase so we are certainly no experts. We were fully aware of the condition when when put the offer in plus we had the survey to back it up hence why we negotiated the first price reduction. I'll keep me fingers crossed for a positive outcome.

AdrianC

Sarahsky wrote: »

We found a house last April and started the buying process which included applying for a mortgage. The agreed price was £310000 which we re-negotiated to £305000 after a structural survey. The mortgage valuation came back at the house valued at £310,000 so everything was going well.
Issues arose with the title plans and solicitors side of things (another absolutely bizarre situation) however this FINALLY was resolved last September / November time.
...
finally heard this week that our mortgage valuation has come back at £290,000! 20k less than the original valuation 6 months ago. Both were performed by the same bank and the only comment was that they 'felt the house had fallen into disrepair'. Which even if that might be true I can't imagine a scenario where that would wipe 20k off of the valuation.
Anyway we were planning on putting a 15% deposit down but now that the bank will only lend £290,000 we really can't afford to stump the extra 15k as we want to do some alterations in the house.

So if you're putting 15% equity into a £305k purchase, that's ~£46k - leaving you with a ~£260k mortgage. Right?

£260k mortgage on a £290k property is just under 90% LtV. Are you saying they won't allow you up to 90% LtV?

Because, if they will, then there shouldn't be anything stopping your purchase... You can still borrow the same amount of money. You might have a slightly higher interest rate, but probably not much.

Mrs_Soup

Are you saying you have the extra 15K but are keeping it for alterations? If so then you could instead put that into the house cost reducing the amount owed and wait a bit to save up for the alterations. May be worth it if you really love the house and plan on being there a good few years.

lookstraightahead

But house prices have gone down that much (imo) they don't stay stable. It's been nearly a year since the last valuation? It's about 6%

ciderboy2009

lookstraightahead wrote: »

But house prices have gone down that much (imo) they don't stay stable. It's been nearly a year since the last valuation? It's about 6%

It depends on where the OP is in the country - in the South East prices may be going down but in a number of other parts of the country they're still going up!

In fact, according to gov.uk, the national average for 2019 was a fall of 1% with the East Midlands having an anual increase of 4.4%