Large Deposit - Mortgage Down Value

SamuelRJ

Hello, 
Naive FTB's here in need of advice: 
Both my partner and I inherited money/ property which has allowed us to put £200k deposit on property. 
We found 1 we love which vendor bought only 3 years ago for £230k but wanted £295k as they have done a lot of work to the place so we agreed. The property has a few snags for mortgage lenders, including a S157 which restricts owners to those who've lived locally, but this isn't an issue for us and the council have already provided a reference saying they'll forego the S157 if house was repossessed and MA is confident based on previous properties he's worked on that this will be fine. 

Anyway, we're now at point of mortgage valuation & we think we've likely over paid what it's worth to a mortgage valuation - Zoopla puts property at £270k. We understand lenders don't like this and it can usually cause real headache for buyers but wondered if we're able to bypass considering we've only asked for £95k & the risk to lender is much less? We really can't throw any more at the deposit.

housebuyer143

SamuelRJ said:

Hello, 
Naive FTB's here in need of advice: 
Both my partner and I inherited money/ property which has allowed us to put £200k deposit on property. 
We found 1 we love which vendor bought only 3 years ago for £230k but wanted £295k as they have done a lot of work to the place so we agreed. The property has a few snags for mortgage lenders, including a S157 which restricts owners to those who've lived locally, but this isn't an issue for us and the council have already provided a reference saying they'll forego the S157 if house was repossessed and MA is confident based on previous properties he's worked on that this will be fine. 

Anyway, we're now at point of mortgage valuation & we think we've likely over paid what it's worth to a mortgage valuation - Zoopla puts property at £270k. We understand lenders don't like this and it can usually cause real headache for buyers but wondered if we're able to bypass considering we've only asked for £95k & the risk to lender is much less? We really can't throw any more at the deposit.

Yes, the lender will only lend what the house is worth but as you have a sizable deposit as long as you don't mind, then the actual official value is of no matter to it at all. You can just proceed as normal, providing it's not valued at 0

mi-key

Zoopla estimates are generally pretty meaningless as they are never accurate, and normally cover a wide range. They are basically just guesses based on what other properties that may be completely different have sold for in the general area.

As you are only borrowing £95K don't worry about the mortgage lenders valuation. It is only a problem if you have a very small deposit and are stretching yourself to buy it. As neither of these apply to you then you will be fine.  They could say they think it is only worth £150K and they would still lend to you. As long as what you are asking to borrow is less than approx 90% of the property value they are happy. 

Sarah1Mitty2

SamuelRJ said:

Hello, 
Naive FTB's here in need of advice: 
Both my partner and I inherited money/ property which has allowed us to put £200k deposit on property. 
We found 1 we love which vendor bought only 3 years ago for £230k but wanted £295k as they have done a lot of work to the place so we agreed. The property has a few snags for mortgage lenders, including a S157 which restricts owners to those who've lived locally, but this isn't an issue for us and the council have already provided a reference saying they'll forego the S157 if house was repossessed and MA is confident based on previous properties he's worked on that this will be fine. 

Anyway, we're now at point of mortgage valuation & we think we've likely over paid what it's worth to a mortgage valuation - Zoopla puts property at £270k. We understand lenders don't like this and it can usually cause real headache for buyers but wondered if we're able to bypass considering we've only asked for £95k & the risk to lender is much less? We really can't throw any more at the deposit.

Sellers often over-estimate how much "doing work" will add to their property value, what have they done that adds 65k of value?

YoungBlueEyes

Depends on the ‘work’. A proper extension, yes. A hideously stylish bathroom that will force your children into therapy for a decade, no. 

SamuelRJ

Sarah1Mitty2 said:

SamuelRJ said:

Hello, 
Naive FTB's here in need of advice: 
Both my partner and I inherited money/ property which has allowed us to put £200k deposit on property. 
We found 1 we love which vendor bought only 3 years ago for £230k but wanted £295k as they have done a lot of work to the place so we agreed. The property has a few snags for mortgage lenders, including a S157 which restricts owners to those who've lived locally, but this isn't an issue for us and the council have already provided a reference saying they'll forego the S157 if house was repossessed and MA is confident based on previous properties he's worked on that this will be fine. 

Anyway, we're now at point of mortgage valuation & we think we've likely over paid what it's worth to a mortgage valuation - Zoopla puts property at £270k. We understand lenders don't like this and it can usually cause real headache for buyers but wondered if we're able to bypass considering we've only asked for £95k & the risk to lender is much less? We really can't throw any more at the deposit.

Sellers often over-estimate how much "doing work" will add to their property value, what have they done that adds 65k of value?

I understand your point, and yes, £65k is probably a stretch, but the house was in a dire state when they took it on (no functioning bathroom) and they've made it really nice. Added utility room and garden room. Plus there's a static van with cladding and PP & a workshop outbuilding. I think it's a fair price. 

badger09

First of all, ignore Zoopla. It is often wildly inaccurate, especially on houses that have been altered or are unusual in themselves. 

If you think this house is worth what you’ve offered, can afford it, & like what previous owners have done to it, then I would go ahead. However, there’s no point paying for work recently done by previous owners if you hate it & will want to undo or change it. 

If you want more reassurance about what you’re paying, you can commission your own RICS surveyor to value it. 

MEM62

SamuelRJ said:

The property has a few snags for mortgage lenders, including a S157 which restricts owners to those who've lived locally, but this isn't an issue for us 

That might not be an issue for you now as you head is in 'moving in' mode.  It will be a big issue when  it restricts your market when selling.    

newsgroupmonkey_

I've no idea where abouts in the country this is, but to put into perspective.....

We bought at £260k in Feb 2020 and sold for £330k early last year.

We did absolutely nothing to our house other than refresh the bathroom and paint it.
We removed a shed that was falling down.

Average house price in the UK in Jan 2020 was £220k. Average now is £288k.

So even if they'd done nothing, it matches the current house prices.

Sarah1Mitty2

SamuelRJ said:

Sarah1Mitty2 said:

SamuelRJ said:

Hello, 
Naive FTB's here in need of advice: 
Both my partner and I inherited money/ property which has allowed us to put £200k deposit on property. 
We found 1 we love which vendor bought only 3 years ago for £230k but wanted £295k as they have done a lot of work to the place so we agreed. The property has a few snags for mortgage lenders, including a S157 which restricts owners to those who've lived locally, but this isn't an issue for us and the council have already provided a reference saying they'll forego the S157 if house was repossessed and MA is confident based on previous properties he's worked on that this will be fine. 

Anyway, we're now at point of mortgage valuation & we think we've likely over paid what it's worth to a mortgage valuation - Zoopla puts property at £270k. We understand lenders don't like this and it can usually cause real headache for buyers but wondered if we're able to bypass considering we've only asked for £95k & the risk to lender is much less? We really can't throw any more at the deposit.

Sellers often over-estimate how much "doing work" will add to their property value, what have they done that adds 65k of value?

I understand your point, and yes, £65k is probably a stretch, but the house was in a dire state when they took it on (no functioning bathroom) and they've made it really nice. Added utility room and garden room. Plus there's a static van with cladding and PP & a workshop outbuilding. I think it's a fair price. 

Best to wait for the valuation and then see how you feel, maybe the seller is thinking "old market" with their pricing, i.e very cheap borrowing?

Sarah1Mitty2

newsgroupmonkey_ said:

I've no idea where abouts in the country this is, but to put into perspective.....

We bought at £260k in Feb 2020 and sold for £330k early last year.

We did absolutely nothing to our house other than refresh the bathroom and paint it.
We removed a shed that was falling down.

Average house price in the UK in Jan 2020 was £220k. Average now is £288k.

So even if they'd done nothing, it matches the current house prices.

It matches some houses that sold a while ago but it doesn`t mean they can sell their one now, averages can be very misleading.