Telling estate agents our LTV?

blueorchid94

Hi, first time buyer and poster here. Like everyone else looking at the moment, it seems like we couldn't have picked a worse time to try and buy a house, but hey ho! We've viewed loads already and had our offers rejected at best and final on 3 so far, which is what every house seems to be going to at the moment. Was starting to get fed up but hoping that the stamp duty holiday coming to an end soonish might be a blessing for us.

We've got an agreement in principle, which doesn't show our LTV on it, so I was wondering if we are under any obligation to tell estate agents what our LTV is/whether the AIP is sufficient as proof of funds, or whether we need to show them savings account statements/screenshots of our ISAs as proof of funds. I only ask because our LTV is 95%, and I made the (perhaps foolish) decision to disclose this to 1 estate agent. We then got to best and finals on two houses they had listed, and both times we missed out. I asked whether this was a case of being outbid or something else and, after some pressing, got out of them that they pretty much advise their clients to avoid anyone with 95% mortgages and they tell their clients the LTVs of everyone bidding on the house, as if the house was undervalued (which it could be with the market the way it is), they wouldn't be confident anyone with a 95% mortgage would be able to cover the extra cost of a downvalution.

First of all, it's crazy to me that anyone would pay to make up the difference if there was a downvaluation, because you're immediately in negative equity, but the fact that this is a reason for them to advise their clients to avoid 95% mortgages seems like rubbish to me. If your house is downvalued, no matter what the LTV of your buyer is, they will probably try to renegotiate or pull out of the purchase, right?

(As an aside, with what we bid on the houses in question, we definitely would have had enough to cover a, say, 5k downvaluation, but would never have paid it in a million years!)

In short, is what the EA said a load of rubbish/what are people's opinions about this? And can you be vague about your LTV?  That's what my mortgage adviser's advice was when I spoke spoke him earlier. After all, it's the lender who needs to know that information, surely?

Thanks in advance 

Redwino222

You are high risk.  I was told the ltv of my buyer - 85%.  It is not the sellers responsibility to change their price to accommodate buyers who have a small deposit.

As someone further up the property ladder I had a 50% LTV.  The bank valuation would have had to be very different from my offer to impact on the deal I could access.  

Look at it from the sellers perspective, and other buyers.  You bid up the price on a house, others drop out, so you win.  But you have no cushion so if your bank doesn’t value the house at what you offered, you can’t get a mortgage get because you have a small deposit.  Other bidders might have had bigger deposits so wouldn’t be impacted in this way.

blueorchid94

Redwino222 said:

You are high risk.  I was told the orb of my buyer - 85%.  It is not the sellers responsibility to chan he their price to accommodate buyers who have a small deposit.

As someone for their up the property ladder I had a 50% LTV.  The bank valuation would have be very different from my offer to impact on the deal I could access.  

Look at of from the sellers perspective, and other buyers.  You bid up the price on a house, others drop out, so you win.  But you have no cushion so if your bank doesn’t value the house at what you offered, you can’t get a mortgage get because you have a small deposit.  Other bidders might have had bigger deposits so wouldn’t be impacted in this way.

Thank you  - that makes sense the way you've explained it. I guess, in that case, is there much hope of us getting anywhere while all this madness is going on, or at all? If one estate agent sees us as high risk, surely they all will and we'll always lose out to someone with a better LTV even if they're in a chain?

Redwino222

Just go in with your eyes open.  Some sellers might meet you half way and it is worth trying to negotiate if you find yourself in that situation.  But to be honest I wouldn’t have entertained an offer from someone who only had a 5% deposit.  The market where I am is moving fast - and valuations aren’t keeping up.  I was lucky that the valuation came in fine. 

Things should slow down once the stamp duty holiday is over (only a few months).

I have no idea what the house I am buying was valued at - and it doesn’t really matter to me.  I did my homework - it’s my forever home and I got an excellent mortgage deal.  A few thousand either way doesn’t matter for me. 

steve866

A good estate will ask your deposit % etc. You might get lucky that they get complacent because everything is crazy at the moment, in which case I wouldn’t volunteer your deposit % because most people would be wary of a buyer with just 5%. 

Redwino222

‘As an aside, with what we bid on the houses in question, we definitely would have had enough to cover a, say, 5k downvaluation, but would never have paid it in a million years!)‘

On reflection I do think you should step out of the market for a while.  If you think a house is worth an amount to bid on, but then will walk away because a bank valuation is £5k different then the housing market at the minute probably isn’t for you.

In the grand scheme of things £5k is nothing for a house you want - and when you have already taken the decision that it is worth what you bid for it.  A bank valuation is not an exact science, no valuation ever can be.  It is a attempt to reflect the sentiment in the market at a point in time.  Of course you pay what you are comfortable with, what you think a house is worth to you and what you can afford.  But you also need to have confidence in your bid, a bank valuations £5k difference on an average priced home is marginal.

K_S

@blueorchid94 EAs always want the most information they can get. As a buyer you want to give them all the information that shows you as proceedable buyers and no more. That would include high-LTV and specialist lenders.

To qualify my clients' offers, I always advise my clients that I can drop an email to the EA confirming that I have checked the client's finances, that they are good for the offer made and that all application will be submitted within 24 hours of the offer being accepted.

For 50% of EAs, that's sufficient. Of the remaining, some will insist on seeing an AIP which I can share if they are insistent. After all this, a small minority may still insist on seeing proof of deposit. 

Afaik, none of my 95% LTV clients have lost out on an offer because the EA thought they were less proceedable than someone with a bit more deposit.

AdrianC

blueorchid94 said:

We've got an agreement in principle, which doesn't show our LTV on it

Your AIP doesn't say the LtV, because the LtV is dependent on the amount you offer for a property...

The AIP says the lender will lend you (say) £180k.
If you offer £200k for a property, that's 90% LtV.
If you offer £360k for a property, that's 50% LtV.

BTW, you don't have to borrow every single penny of the amount the AiP is for...

JuzaMum

I recently had a below asking price offer accepted on a property. I had to show the estate agent proof of funds which showed I could go to full asking price. My offer was accepted without any pushing to go higher.

MobileSaver

blueorchid94 said:

it's crazy to me that anyone would pay to make up the difference if there was a downvaluation, ... we definitely would have had enough to cover a, say, 5k downvaluation, but would never have paid it in a million years!

That's a perfectly understandable attitude to have if funds are tight but you have to ask yourself what the alternative is?

Are you currently in rented? If so, for how many years are you happy to keep paying your landlord's mortgage instead of your own if your situation regarding house prices doesn't change?

Or are you currently living with parents? If so, for how many years are you and/or they happy for you to keep living under their roof with their rules?

Everyone has to live somewhere and most people want their own place where they can pretty much do what they want - I would venture that most people would consider paying an extra £5k to be peanuts for the huge number of benefits that come with owning your own home.

moneysavinghero

with what we bid on the houses in question, we definitely would have had enough to cover a, say, 5k downvaluation, but would never have paid it in a million years

Guess it's a question of psychology. People are happy to bid 5k over the asking price in order to 'win' the property, but when the property gets valued 5k less they stomp their feet and say they are not willing to pay more than the house is worth.