Buying over the odds mid-fix!!

weddingringman

My current fix is coming to an end in November. We owe 122K and TSB value our place at 220K. So sub 60% LTV, good rates, and they go on their prediction. No drive-by or survey required. We have a seen a house that is 250K but we plan on offering 280K. We're in Scotland, so the home report valuation drives LTV and we are paying over the odds. If we were an FTB wishing to place 20% down to get an 80% LTV rate, then I believe this would be (0.2 x 250) + 30 = 80K deposit for 80% LTV. Not 0.2 x 280K... which may in England be 56K...

So the twist is that the TSB are advising us to lock in our current house on a new sub 60% LTV deal, knowing that we are wishing to move shortly. The advantages are obvious as 2/3s of what we owe will be at the lower rate. But what happens if we offer over the odds on this new property? Will TSB just work out the LTV of the additional borrowing... or could they take the hard line and say they will lend up to £250K but the 30K extra we are offering has to be cash?

kingstreet

Lenders base maximum lending and loan to value bandings for products on the lower of purchase price or valuation, in this case the HomeReport value. If you are paying £280k, but the HomeReport value is only £250k, TSB will only lend (eg) 80% of the valuation. Therefore, you will be able to borrow only £200k, not £224k resulting in the need for an increase in your deposit of £24k.