Asking for a Reduction on House Price

Crashy_Time

Never too late to lower your offer, especially not in this climate.

blue_max_3

steampowered said:

Yes, you will want to be able to remortgage at the end of your 2 year term. Otherwise you'll be stuck on the lender's SVR paying a much much higher interest rate.

That isn't exactly true. You would be free to go onto another product by the same lender (fixed or tracker). There would be no assessment of the LTV as the SVR would likely be more anyway. You just would find it difficult to move lenders.

Crashy_Time

AdrianC said:

Let's say you buy for £100k. You have £10k equity, £90k mortgage.
In one year's time, you've paid off £1k of the mortgage, so owe £89k.

If the value falls to £95k, you are not in -ve equity. You have £6k equity.
If the value falls to £90k, you are not in -ve equity. You have £1k equity.
If the value falls to £85k, you are in -ve equity. You have -£4k equity.

If you sell at £85k, then you will need to put £4k equity in to be free. If you do not sell... it doesn't matter. Sure, you'd need to put equity in to remortgage... or hold off on the remortgage.

Most people are conditioned to think they will sell for more than they paid though, the idea that they may not get back what they paid, never mind NE is what is making most people hold back from purchasing just now.

Crashy_Time

AdrianC said:

ChloeParrish said:

We are aware that house prices are going to fall leaving us in negative equity.

No, you THINK they'll fall. Nobody knows. And negative equity would require a 5-10% fall. It means that you owe more on the mortgage than the house is worth, not that the value is simply less than you paid.

After researching we found that if your house is in negative equity lenders are reluctant to giving you the loan and at a low interest rate.

It's the LtV of the mortgage that's important, not what you may have paid for the property some time previously. You will not find a 100%+ mortgage (which is what -ve equity would require) not without a time machine set to the mid 00s.

Our sellers are extremely reluctant to giving us any reduction, are we worrying too much, or should we ensure we get a reduction and if not should we back out and not buy the house?

You really have three choices...
1. Reach an agreement. This is not in your sole control.
2. Continue to pay the already-agreed price.
3. Walk away. Push too hard, this may not be in your control, either.

Most people think they are going to fall.

CheesyWiggles

blue_max_3 said:

steampowered said:

Yes, you will want to be able to remortgage at the end of your 2 year term. Otherwise you'll be stuck on the lender's SVR paying a much much higher interest rate.

That isn't exactly true. You would be free to go onto another product by the same lender (fixed or tracker). There would be no assessment of the LTV as the SVR would likely be more anyway. You just would find it difficult to move lenders.

How so? For arguments sake, If a house price dropped significantly, to the point where the equity was less than 10% of the loan, how could you switch to another product even with the same lender? Do you mean drop to a 95 LTV mortgage, or is there another mechanism?

Scotbot

Crashy_Time 

Most people think they are going to fall.

Yes but no one knows by how much and it will vary by region. BoE forecasts 16% but their economic forecasts over the last 3 years have been consistently pessimistic. 

davidmcn

CheesyWiggles said:

blue_max_3 said:

steampowered said:

Yes, you will want to be able to remortgage at the end of your 2 year term. Otherwise you'll be stuck on the lender's SVR paying a much much higher interest rate.

That isn't exactly true. You would be free to go onto another product by the same lender (fixed or tracker). There would be no assessment of the LTV as the SVR would likely be more anyway. You just would find it difficult to move lenders.

How so? For arguments sake, If a house price dropped significantly, to the point where the equity was less than 10% of the loan, how could you switch to another product even with the same lender? Do you mean drop to a 95 LTV mortgage, or is there another mechanism?

There's not necessarily any revaluation taking place for a retention product. I don't remember value being mentioned the last time I signed up a new deal.

AdrianC

Crashy_Time said:

AdrianC said:

ChloeParrish said:

We are aware that house prices are going to fall leaving us in negative equity.

No, you THINK they'll fall. Nobody knows. 

Most people think they are going to fall.

Tell us, Crashy... How long have you been swearing blind they're about to fall? Is it three decades now? And what's actually happened to them in that time?

Mickey666

I agree that negative equity is not such a big deal.  The most important thing is to be able to afford the repayments.  If you can do that it doesn't really matter what the market price of the house is.  And if it's your 'forever house' then it definitely doesn't matter.

Having said that, if the OP thinks they should ask for a price reduction then ask.  There's no need to justify why they're asking, could be a million reasons.  Besides, the seller won't care about the reasons they'll simply agree or refuse . . . whatever the elaborate economic forecasts and reasoning might be.  Just do it . . . . but also be prepared to lose the purchase.

mattyprice4004

Really selfish to delete your initial post when people have taken the time to help - this could have helped someone in future.