Do I use the value of the property, or what I am paying for the property in mortgage calculations?

AbiHope22

My mother in law is looking at selling us her house for £300,000 - it has been valued at £390,000 (I know, she is very kind). We ideally want to put a 5% deposit so the mortgage we would be taking is £285,000.
When looking at the mortgage calculators online; they all ask for the property value rather than the price we will be paying for the house.
So should I be putting the 300,000 we are buying it for, or the value of the property?

I'll be calling around looking for mortgages, but just wanted to know if anyone has any nuggets of wisdom.
Thanks in advance

Swoosh84

Yes, you need to enter £300k as the valuation. Any LTV rate you receive will be based on the purchase price of £300k. However, come valuation time at the end of your first fixed rate period the LTV rate you receive will be based on market value of the property.

J

AbiHope22

Thanks, thats great

SpiderLegs

I imagine a broker will be along shortly to tell you that it depends on the lender.

K_S

AbiHope22 said:

My mother in law is looking at selling us her house for £300,000 - it has been valued at £390,000 (I know, she is very kind). We ideally want to put a 5% deposit so the mortgage we would be taking is £285,000.
When looking at the mortgage calculators online; they all ask for the property value rather than the price we will be paying for the house.
So should I be putting the 300,000 we are buying it for, or the value of the property?

I'll be calling around looking for mortgages, but just wanted to know if anyone has any nuggets of wisdom.
Thanks in advance

@abihope22 This is called a concessionary purchase. With the right lender, if you were putting in a 15k cash deposit, the 90k difference between market value and selling price will also count as a deposit, giving you a 285k mortgage at less than 75% LTV. I hope that makes sense.

dimbo61

So it might be a good idea to use a mortgage broker to help you find the Right lender and the best deal for your circumstances.

[Deleted User]

I completely agree about using a mortgage broker to place you with the right lender for a concessionary purchase. You have already received in incorrect advice on here by one poster so its vital this is handled by a broker who knows the correct way to key this in, and match it with the correct lender 

LRmortgage

As above, this is a concessionary purchase and the value of the “gifted” discount can be used by some lenders as deposit and therefore lowering your LTV. 

Best use a broker and ignore the bad advice  given by some non brokers...