95% LTV Mortgages

RelievedSheff

If you are sure that this will be a long term home and you can afford the mortgage repayments and more importantly you can find a lender willing to lend at 95% LTV then there is no reason not to go for it. Fix your mortgage for a longish, say 5 year term and any short term drops in value will not be a problem.

[Deleted User]

steampowered said:

- Try to negotiate the price down, which will give you a better LTV. 

LTV for mortgage purposes is based on the lower of the purchase price or valuation.  Negotiating down will help with retaining actual equity obviously but wont change the deposit % massively.   5% of £175k is  £8750.   Changing purchase price to £160k with same deposit would still be just over 5% deposit so wouldnt change anything mortgage wise. 

Crashy_Time

Sailtheworld said:

Crashy_Time said:

Sailtheworld said:

FOGGY1974 said:

Hi all. I hope you can help. We are saving for a deposit to buy the house we are renting, trouble is I see most banks etc are not doing 95% LTV Mortgages any more. What can we do if we have not got enough deposit for a 80 - 85% LTV mortgage?
The house is currently going through Probate as the current owner passed away, this should be sorted by around July and we have a rental agreement till mid July. 

A smaller deposit puts you at increased risk of negative equity so you need to be reasonably sure you're staying for a while. Also, although strapped for a deposit, try to ensure there's enough cash to try and overpay which will help reduce the risk of negative equity over time. The other thing is that negative equity is absolutely nowhere near as scary as it's made out by the media and Internet forums.

You're actually in a good position. The executors of the estate, if they've got any sense, will realise that an incumbent tenant wanting to buy is quite an attractive proposition and be willing to negotiate a favourable price.

If you can't raise an 80 - 85% deposit right now (and a 95% mortgage isn't available) then maybe the executors would be willing to get into the rental game until you can? Again that might be an attractive proposition - they've been left a house and a monthly income stream. They must be pinching themselves.

You have to be ready to walk though. 

The "rental game" is much less attractive than it used to be due to taxation changes, unlikely that anyone would want to go that route, especially at this time, best to just lower the offer IMO.

The person who has inherited the property has already found themselves in the rental game. First world problem really - certainly worse things than inadvertently finding yourself the landlord of a free property with a reliable tenant who wants to buy it.

Some basic back of fag packet maths should inform you that lowering the offer doesn't much help the OP. If they've got a 5% deposit but they want the same sum to be a 20% deposit they need to offer 75% less.

At 85% LTV with a 5k deposit they would be knocking around 21k off their offer price, entirely reasonable in this climate IMO, plus the landlord obviously doesn`t want to be in the rental game as they are trying to sell, which just gives more power to the tenant/buyer.

[Deleted User]

175k at 5% deposit is £8750
To use the same deposit and get to 85% ltv would be a purchase price of less than £59k.  Over £100k less than the current offer

Im not sure what you mean @Crashy_Time.   Maybe ive completely missed something

blue_max_3

sjc93 said:

we're fed up of having dead money go towards a BTL when our payments could be going on a home. Our home.

I wouldn't be too worried about the time you have been renting. You may find any discount may cover the rent over that time.
Plus to own, consider this...
You may have had to pay Stamp Duty (and there are rumours that this may be put hold for a spell).
You will have had to have building insurance.
You may have had maintenance.
In the first two years, you will have made very little difference to the capital as most of the monthly payments are interest.
Just saying it's not as much a difference as you may imagine.

sjc93

blue_max_3 said:

I wouldn't be too worried about the time you have been renting. You may find any discount may cover the rent over that time.
Plus to own, consider this...
You may have had to pay Stamp Duty (and there are rumours that this may be put hold for a spell).
You will have had to have building insurance.
You may have had maintenance.
In the first two years, you will have made very little difference to the capital as most of the monthly payments are interest.
Just saying it's not as much a difference as you may imagine.

I do worry about the time I've been renting though, as does my partner. We've rented for several years and with where we live, giving someone almost £1,000 towards their own mortgage when that could being paying off our own capital and interest - that's a big difference, especially when house prices have been on the rise for the last decade and I imagine will continue to do so, it's a highly sought out area.

We haven't had to pay stamp duty as our property is under 350K and it's a freehold property that we're purchasing - anything rented going wrong with the exceptions of windows & boilers, we'd need to maintain and pay out of our own pockets.

We also already have contents insurance, and it's not that much price difference to add on the buildings aspects to it either.

It may not be a huge difference, but it's still money going towards something that I own and that it isn't dead money going towards paying off someone else's BTL mortgage.

Sailtheworld

Crashy_Time said:

Sailtheworld said:

Crashy_Time said:

Sailtheworld said:

FOGGY1974 said:

Hi all. I hope you can help. We are saving for a deposit to buy the house we are renting, trouble is I see most banks etc are not doing 95% LTV Mortgages any more. What can we do if we have not got enough deposit for a 80 - 85% LTV mortgage?
The house is currently going through Probate as the current owner passed away, this should be sorted by around July and we have a rental agreement till mid July. 

A smaller deposit puts you at increased risk of negative equity so you need to be reasonably sure you're staying for a while. Also, although strapped for a deposit, try to ensure there's enough cash to try and overpay which will help reduce the risk of negative equity over time. The other thing is that negative equity is absolutely nowhere near as scary as it's made out by the media and Internet forums.

You're actually in a good position. The executors of the estate, if they've got any sense, will realise that an incumbent tenant wanting to buy is quite an attractive proposition and be willing to negotiate a favourable price.

If you can't raise an 80 - 85% deposit right now (and a 95% mortgage isn't available) then maybe the executors would be willing to get into the rental game until you can? Again that might be an attractive proposition - they've been left a house and a monthly income stream. They must be pinching themselves.

You have to be ready to walk though. 

The "rental game" is much less attractive than it used to be due to taxation changes, unlikely that anyone would want to go that route, especially at this time, best to just lower the offer IMO.

The person who has inherited the property has already found themselves in the rental game. First world problem really - certainly worse things than inadvertently finding yourself the landlord of a free property with a reliable tenant who wants to buy it.

Some basic back of fag packet maths should inform you that lowering the offer doesn't much help the OP. If they've got a 5% deposit but they want the same sum to be a 20% deposit they need to offer 75% less.

At 85% LTV with a 5k deposit they would be knocking around 21k off their offer price, entirely reasonable in this climate IMO, plus the landlord obviously doesn`t want to be in the rental game as they are trying to sell, which just gives more power to the tenant/buyer.

Your maths is way out. The OP has a 5% deposit for a £175k purchase price so £8750. If they want to put in an offer such that £8750 represents a 15% deposit they need to buy the place (for which a £160k offer has been refused) for just shy of £59k. i.e. it's better when buying something to pay as little as possible but when it comes to deposits you need to pay an awful lot less to turn a 5% deposit into 15%.

Although you are certain that less should be paid because of current circumstances in the real World we have no idea whether the asking price is fair or not. However, assume they get your incorrectly calculated £21k off and they're paying £154k. Their 5% deposit is now a 5.7% deposit. Hope this helps.

Sailtheworld

blue_max_3 said:

sjc93 said:

we're fed up of having dead money go towards a BTL when our payments could be going on a home. Our home.

I wouldn't be too worried about the time you have been renting. You may find any discount may cover the rent over that time.
Plus to own, consider this...
You may have had to pay Stamp Duty (and there are rumours that this may be put hold for a spell).
You will have had to have building insurance.
You may have had maintenance.
In the first two years, you will have made very little difference to the capital as most of the monthly payments are interest.
Just saying it's not as much a difference as you may imagine.

It's perfectly true that over the initial short term the financial benefits are small and there's more risk because equity tends to be at its lowest. If you want the long term benefits of home ownership you have to buy - the sooner the better.

Crashy_Time

Sailtheworld said:

Crashy_Time said:

Sailtheworld said:

Crashy_Time said:

Sailtheworld said:

FOGGY1974 said:

Hi all. I hope you can help. We are saving for a deposit to buy the house we are renting, trouble is I see most banks etc are not doing 95% LTV Mortgages any more. What can we do if we have not got enough deposit for a 80 - 85% LTV mortgage?
The house is currently going through Probate as the current owner passed away, this should be sorted by around July and we have a rental agreement till mid July. 

A smaller deposit puts you at increased risk of negative equity so you need to be reasonably sure you're staying for a while. Also, although strapped for a deposit, try to ensure there's enough cash to try and overpay which will help reduce the risk of negative equity over time. The other thing is that negative equity is absolutely nowhere near as scary as it's made out by the media and Internet forums.

You're actually in a good position. The executors of the estate, if they've got any sense, will realise that an incumbent tenant wanting to buy is quite an attractive proposition and be willing to negotiate a favourable price.

If you can't raise an 80 - 85% deposit right now (and a 95% mortgage isn't available) then maybe the executors would be willing to get into the rental game until you can? Again that might be an attractive proposition - they've been left a house and a monthly income stream. They must be pinching themselves.

You have to be ready to walk though. 

The "rental game" is much less attractive than it used to be due to taxation changes, unlikely that anyone would want to go that route, especially at this time, best to just lower the offer IMO.

The person who has inherited the property has already found themselves in the rental game. First world problem really - certainly worse things than inadvertently finding yourself the landlord of a free property with a reliable tenant who wants to buy it.

Some basic back of fag packet maths should inform you that lowering the offer doesn't much help the OP. If they've got a 5% deposit but they want the same sum to be a 20% deposit they need to offer 75% less.

At 85% LTV with a 5k deposit they would be knocking around 21k off their offer price, entirely reasonable in this climate IMO, plus the landlord obviously doesn`t want to be in the rental game as they are trying to sell, which just gives more power to the tenant/buyer.

Your maths is way out. The OP has a 5% deposit for a £175k purchase price so £8750. If they want to put in an offer such that £8750 represents a 15% deposit they need to buy the place (for which a £160k offer has been refused) for just shy of £59k. i.e. it's better when buying something to pay as little as possible but when it comes to deposits you need to pay an awful lot less to turn a 5% deposit into 15%.

Although you are certain that less should be paid because of current circumstances in the real World we have no idea whether the asking price is fair or not. However, assume they get your incorrectly calculated £21k off and they're paying £154k. Their 5% deposit is now a 5.7% deposit. Hope this helps.

So in the absence of any other proceedable buyers with a larger deposit we would agree that the seller is being over ambitious on price, especially in the present climate when a lot of people are losing jobs, and that if they want to exit the rental game a price drop is in order?

Sailtheworld

Crashy_Time said:

Sailtheworld said:

Crashy_Time said:

Sailtheworld said:

Crashy_Time said:

Sailtheworld said:

FOGGY1974 said:

Hi all. I hope you can help. We are saving for a deposit to buy the house we are renting, trouble is I see most banks etc are not doing 95% LTV Mortgages any more. What can we do if we have not got enough deposit for a 80 - 85% LTV mortgage?
The house is currently going through Probate as the current owner passed away, this should be sorted by around July and we have a rental agreement till mid July. 

A smaller deposit puts you at increased risk of negative equity so you need to be reasonably sure you're staying for a while. Also, although strapped for a deposit, try to ensure there's enough cash to try and overpay which will help reduce the risk of negative equity over time. The other thing is that negative equity is absolutely nowhere near as scary as it's made out by the media and Internet forums.

You're actually in a good position. The executors of the estate, if they've got any sense, will realise that an incumbent tenant wanting to buy is quite an attractive proposition and be willing to negotiate a favourable price.

If you can't raise an 80 - 85% deposit right now (and a 95% mortgage isn't available) then maybe the executors would be willing to get into the rental game until you can? Again that might be an attractive proposition - they've been left a house and a monthly income stream. They must be pinching themselves.

You have to be ready to walk though. 

The "rental game" is much less attractive than it used to be due to taxation changes, unlikely that anyone would want to go that route, especially at this time, best to just lower the offer IMO.

The person who has inherited the property has already found themselves in the rental game. First world problem really - certainly worse things than inadvertently finding yourself the landlord of a free property with a reliable tenant who wants to buy it.

Some basic back of fag packet maths should inform you that lowering the offer doesn't much help the OP. If they've got a 5% deposit but they want the same sum to be a 20% deposit they need to offer 75% less.

At 85% LTV with a 5k deposit they would be knocking around 21k off their offer price, entirely reasonable in this climate IMO, plus the landlord obviously doesn`t want to be in the rental game as they are trying to sell, which just gives more power to the tenant/buyer.

Your maths is way out. The OP has a 5% deposit for a £175k purchase price so £8750. If they want to put in an offer such that £8750 represents a 15% deposit they need to buy the place (for which a £160k offer has been refused) for just shy of £59k. i.e. it's better when buying something to pay as little as possible but when it comes to deposits you need to pay an awful lot less to turn a 5% deposit into 15%.

Although you are certain that less should be paid because of current circumstances in the real World we have no idea whether the asking price is fair or not. However, assume they get your incorrectly calculated £21k off and they're paying £154k. Their 5% deposit is now a 5.7% deposit. Hope this helps.

So in the absence of any other proceedable buyers with a larger deposit we would agree that the seller is being over ambitious on price, especially in the present climate when a lot of people are losing jobs, and that if they want to exit the rental game a price drop is in order?

You tend not to have proceedable buyers before putting a house on the market. It really is a long time since you sold isn't it?

By all means the buyer should seek the lowest price possible but you simply have no clue as to whether the vendor is being over ambitious. Maybe it's too high or maybe it's priced just right taking into account current circumstances. Don't forget that in your World you always start with the premise that a house is too expensive because of [insert latest reason here].

If the OP thinks the price is too high then they walk away. Perhaps the vendor will come to the same realisation if / when they get no interest