house down valued - confused

goodwithsaving

Thank you @AdrianC
That actually alleviates some panic while awaiting valuations and offers. Thank you

green_pea_2

MobileSaver said:

green_pea_2 said:

there's no way I'm pumping my savings into this purchase - especially if a surveyor has explained they have plenty of very recent comparable data to show we're definitely overpaying.

I guess this just shows that we are all different. I'd be the opposite and initially thinking why wouldn't you pump your savings into a home that was "in a great location, and in good condition. Really cute inside, lovely garden"?

Presumably your answer is that there are currently comparable homes in that location that are cheaper? In which case my next question would be why did you choose the property with the "optimistic valuation"... ?

Because they sold 2-3 months ago and I don't have a time machine

green_pea_2

AdrianC said:

So you've offered £202k, with 85% LtV - £171.7k - mortgage.

The lender's going to view that as just under 92% LtV. Will they lend you that much?

Apologies, I'm not sure I understand this. Why will they view it as just under 92%?

Another question - if our 15% deposit is considered so low, what would a 5-10% FTB deposit be considered in comparison? We're in the awkward situation now where houses in the 200-240K bracket are advertised as "ideal FTB purchase", and this isn't in posh areas, just fairly pleasant ones.

MaryNB

green_pea_2 said:

AdrianC said:

So you've offered £202k, with 85% LtV - £171.7k - mortgage.

The lender's going to view that as just under 92% LtV. Will they lend you that much?

Apologies, I'm not sure I understand this. Why will they view it as just under 92%?

Another question - if our 15% deposit is considered so low, what would a 5-10% FTB deposit be considered in comparison? We're in the awkward situation now where houses in the 200-240K bracket are advertised as "ideal FTB purchase", and this isn't in posh areas, just fairly pleasant ones.

If the valuation is lower than your offer, the bank will calculate LTV based on the valuation. The mortgage you need will be divided by £187k not £202k giving an LTV of greater that 90% which means you'll end up paying a higher interest rate. You interest rate will be based on 95% mortgage not an 85% mortgage. That's if your lender is doing 95% mortgages. If they aren't you'll need to find another lender. 

FTB_Help

green_pea_2 said:

AdrianC said:

So you've offered £202k, with 85% LtV - £171.7k - mortgage.

The lender's going to view that as just under 92% LtV. Will they lend you that much?

Apologies, I'm not sure I understand this. Why will they view it as just under 92%?

Another question - if our 15% deposit is considered so low, what would a 5-10% FTB deposit be considered in comparison? We're in the awkward situation now where houses in the 200-240K bracket are advertised as "ideal FTB purchase", and this isn't in posh areas, just fairly pleasant ones.

You applied for 85% mortgage (you have £30k deposit) =£171.7k

It has been downvalued to £187k (202-15).

So now you want the bank to lend you 171.7k (if you're still going ahead with buying at 202k) meaning the ltv according to the valuation is now 171.7/187=92%.

MobileSaver

green_pea_2 said:

MobileSaver said:

green_pea_2 said:

there's no way I'm pumping my savings into this purchase - especially if a surveyor has explained they have plenty of very recent comparable data to show we're definitely overpaying.

Presumably your answer is that there are currently comparable homes in that location that are cheaper? In which case my next question would be why did you choose the property with the "optimistic valuation"... ?

Because they sold 2-3 months ago and I don't have a time machine

You see, if I'm perfectly honest, that's exactly what I thought you would say!

Prices are calculated based on supply and demand so if demand stays the same or increases (as it is currently) and supply decreases (as it is currently since the comparative properties have already sold) then prices will rise. It's basic economics and so it's hard to understand how that is "definitely overpaying".

Fundamentally, like pretty much everything in life, if something is in short supply but you want it then you typically have to pay more for it...

Of course, you may get lucky and the seller for their own reasons negotiates an acceptable deal with you but you do need to consider what your options are if a deal can't be reached. Similarly, an equally nice house in a great location, and in good condition, really cute inside and lovely garden may come on to the market at a better price next week, who knows.

Just be aware that one poster on this thread has continued renting and paying his landlord's mortgage instead of his own for at least seven years because he's not been prepared to pay market prices, are you happy to do the same?

Redwino222

goodwithsaving said:

Thank you @AdrianC
That actually alleviates some panic while awaiting valuations and offers. Thank you

I don’t think you should panic at all.  

Depends on the lender / but you probably won’t even know what they valued the house at.  You only find out if the valuation causes a problem and alters what they are willing to lend you or the deal.

My mortgage can though in a week - I have no idea what the bank valued the house at.  But I know with a 50% deposit it would sail through. 

Wes121708

We had the same issue but the difference was 25k vendor won't budge and that's why it's been on the market for a while. We can't make up the difference and only have 10% deposit so no wriggle room. 
We've gone with a different lender who uses a different surveyor and the valuation is today. We'll see what it gets valued at and if a huge difference we will walk away! We're not paying for the valuation. 

Crashy_Time

green_pea_2 said:

hazyjo said:

Surely it's been valued at £187k not £200k? Or did you mean EA when you said surveyor?

I'd be far more likely to drop the price as a result of a down-valuation than a survey. Use it and try. Do you have the cash to make up the difference if they won't drop or will only agree to drop a percentage?

We do have some cash yes, but I'm not inclined to pump my savings into this purchase. Doesn't seem like a very wise move, both in the short and in the longer term. I feel for the vendors as they'll have trusted the EAs optimistic valuation and they may need the full amount. I'm thinking it's unlikely they'll drop significantly. I'm an empath so I'm feeling very bad as they're in a chain (we are renting), but there's no way I'm pumping my savings into this purchase - especially if a surveyor has explained they have plenty of very recent comparable data to show we're definitely overpaying. Ugh

Yes, that could be regretted later on.

Crashy_Time

MobileSaver said:

green_pea_2 said:

MobileSaver said:

green_pea_2 said:

there's no way I'm pumping my savings into this purchase - especially if a surveyor has explained they have plenty of very recent comparable data to show we're definitely overpaying.

Presumably your answer is that there are currently comparable homes in that location that are cheaper? In which case my next question would be why did you choose the property with the "optimistic valuation"... ?

Because they sold 2-3 months ago and I don't have a time machine

You see, if I'm perfectly honest, that's exactly what I thought you would say!

Prices are calculated based on supply and demand so if demand stays the same or increases (as it is currently) and supply decreases (as it is currently since the comparative properties have already sold) then prices will rise. It's basic economics and so it's hard to understand how that is "definitely overpaying".

Fundamentally, like pretty much everything in life, if something is in short supply but you want it then you typically have to pay more for it...

Of course, you may get lucky and the seller for their own reasons negotiates an acceptable deal with you but you do need to consider what your options are if a deal can't be reached. Similarly, an equally nice house in a great location, and in good condition, really cute inside and lovely garden may come on to the market at a better price next week, who knows.

Just be aware that one poster on this thread has continued renting and paying his landlord's mortgage instead of his own for at least seven years because he's not been prepared to pay market prices, are you happy to do the same?

The recent spike in prices is because people who couldn`t afford to pay stamp duty are being allowed to ignore stamp duty to get into mortgage debt they won`t be able to afford if mortgage rates rise.