Valuation only slightly lower, still within 'chosen product range'

Spiderroo

We're buying a house for £288,000 and we've had our mortgage offer approved, subject to due diligence checks (for fraud, etc). The document attached is for a valuation of £280,000 which is the outcome of their desktop valuation. They've said this doesn't affect our 'chosen product range' so they will issue a mortgage offer for the original loan amount £243,800 + fees.

Will this affect our LTV? Or do we have to find the extra £8k? With the mortgage offer we have enough deposit for the full amount so it seems like it's still £288,000 but I'm not sure if we're missing something. It's not clear from correspondence with our broker and they don't seem overly bothered but we've not experienced this issue before and don't understand how it translates to the real world. 

K_S

@spiderroo

Old LTV - Loan size of 243.8k on a purchase price of 288k is 84.65% LTV, so I would assume that you applied for an 85% LTV product.

New LTV - Loan size of 243.8k on a valuation of 280k is 87% LTV, so it should push you into the 90% LTV band with respect to eligible products.

So unless you've put in the wrong numbers (or I've missed something obvious!), I'm not exactly sure how you are still on the same 85% LTV product that you applied for.

I can't think of any mainstream lenders that have a single LTV band from 80.01-90% LTV

Spiderroo

K_S said:

@spiderroo

Old LTV - Loan size of 243.8k on a purchase price of 288k is 84.65% LTV, so I would assume that you applied for an 85% LTV product.

New LTV - Loan size of 243.8k on a valuation of 280k is 87% LTV, so it should push you into the 90% LTV band with respect to eligible products.

So unless you've put in the wrong numbers (or I've missed something obvious!), I'm not exactly sure how you are still on the same 85% LTV product that you applied for.

I can't think of any mainstream lenders that have a single LTV band from 80.01-90% LTV

I copied the figures straight from the email so they’re definitely right. I didn’t check if we were on an 85% product - we went for the best interest rate on a five year fixed term. Is that really bad? We still have the same interest rate on the letter as our original application I think but I’ll ask my partner as he’s much better at the paperwork side of things! 

K_S

@spiderroo Then perhaps I'm missing something obvious. But if the lender has indeed issued a mortgage offer with no change to the rate that you applied for and your broker has confirmed that the small downval makes no material difference, that's perfect!

To answer your question, nothing changes for you, you don't need to find 8k extra as you already have the deposit to cover the difference between the purchase price and mortgage amount.