Downvalue and mortgage payments

antony2395

la531983 said:

kingstreet said:

antony2395 said:

Hello all,

we recently made an application with nationwide for a property for £170k (22k deposit and 148k loan).

nationwide did a valuation and found the house to worth 165k instead of 170. Seller did not want to go lower, so we decided to fork out the extra 5k as we quite liked it. Does that mean that our deposit will now be 27k and the loan will be 143k? That means that our payments every month need to be lower if nationwide approves the mortgage. 

Our mortgage advisor is saying that the mortgage figures will remain the same so the monthly payments will remain the same?

which seems wrong to me? Unless I am missing something? 

You were paying £170,000 and borrowing £148,000 so your deposit was £22,000. Your loan to value was 87.05% based on the agreed price.

You are paying £170,000 and borrowing £148,000 so your deposit is £22,000. Your loan to value is 89.69% based on the valuation.

Your product remains the same as you are not moving into a higher LTV band as MWT stated.

Ergo, your payments remain the same.

I don't think the OP was confused about LTV, for some reason he thinks he has to pay more of a deposit because the vendor has ignored the valuation and added 5k to it. 

Which isn't the case. 

Probably as I am first time buyer and am not sure what the hell is going on.

we offered 170k, 22k deposit and 148k loan.

After valuation nationwide said its worth 165k.

Went back to seller if they will lower the price, they say no.

So that leaves a 5k. We are ok to up our deposit to 27k  if that means the loan will go to 143k.

Our mortgage advisor is I think not helpful at all as we said we would like to up our deposit to 27k to make up the difference and just came back to us with saying that the mortgage figures will remain the same, so the monthly payments will remain the same. 

We have asked for more clarification but have gotten none.

if we are to pay 5k more, that still means we pay 22k deposit 148k loan and 5k more? that will bring the total to 175k for us? will the seller receive 175k? that is what I am not understanding!

la531983

Erm no, you pay your 22k deposit and NW lend you 148k.
That totals 170k which is the asking price. 

Simple as that. Nothing has changed 

You are over complicating it for some unknown reason. 

antony2395

la531983 said:

Erm no, you pay your 22k deposit and NW lend you 148k.
That totals 170k which is the asking price. 

Simple as that. Nothing has changed 

You are over complicating it for some unknown reason. 

They have not replied to us if they actually accept that or not... only wish our mortgage advisor was a little bit more helpful and would reply to our emails with some clarification

antony2395

antony2395 said:

la531983 said:

Erm no, you pay your 22k deposit and NW lend you 148k.
That totals 170k which is the asking price. 

Simple as that. Nothing has changed 

You are over complicating it for some unknown reason. 

They have not replied to us if they actually accept that or not... only wish our mortgage advisor was a little bit more helpful and would reply to our emails with some clarification

with they I mean the bank*

la531983

antony2395 said:

la531983 said:

Erm no, you pay your 22k deposit and NW lend you 148k.
That totals 170k which is the asking price. 

Simple as that. Nothing has changed 

You are over complicating it for some unknown reason. 

They have not replied to us if they actually accept that or not... only wish our mortgage advisor was a little bit more helpful and would reply to our emails with some clarification

Well that's up to the vendor. If NW are happy to lend you 148 though it should be fine for you to pay a 22k deposit and proceed.

Nothing has changed, you were happy to pay 170k before the valuation, clearly. 

antony2395

la531983 said:

antony2395 said:

la531983 said:

Erm no, you pay your 22k deposit and NW lend you 148k.
That totals 170k which is the asking price. 

Simple as that. Nothing has changed 

You are over complicating it for some unknown reason. 

They have not replied to us if they actually accept that or not... only wish our mortgage advisor was a little bit more helpful and would reply to our emails with some clarification

Well that's up to the vendor. If NW are happy to lend you 148 though it should be fine for you to pay a 22k deposit and proceed.

Nothing has changed, you were happy to pay 170k before the valuation, clearly. 

yes of course, we are ok with 170k. we would only need the 5k extra if they say they will not offer a mortgage for 170 but only 165 right? and in that case the loan would be 143k and deposit 27k so in total 170k again as before.

MWT

antony2395 said:

Our mortgage advisor is I think not helpful at all as we said we would like to up our deposit to 27k to make up the difference and just came back to us with saying that the mortgage figures will remain the same, so the monthly payments will remain the same. 

We have asked for more clarification but have gotten none.

If your advisor is saying the mortgage figures remain the same, they are telling you the lender is not changing the amount they are lending, so you do not have to change the amount of your deposit...

The point about the valuation is to let the lender decide if it is high enough to support the amount you want to borrow, not just to see if it is exactly the same as you are paying, the two things are not the same.

Your lender appears to be happy with a £165k valuation to support lending you £148k, so nothing has changed.

la531983

antony2395 said:

la531983 said:

8antony2395 said:

la531983 said:

Erm no, you pay your 22k deposit and NW lend you 148k.
That totals 170k which is the asking price. 

Simple as that. Nothing has changed 

You are over complicating it for some unknown reason. 

They have not replied to us if they actually accept that or not... only wish our mortgage advisor was a little bit more helpful and would reply to our emails with some clarification

Well that's up to the vendor. If NW are happy to lend you 148 though it should be fine for you to pay a 22k deposit and proceed.

Nothing has changed, you were happy to pay 170k before the valuation, clearly. 

yes of course, we are ok with 170k. we would only need the 5k extra if they say they will not offer a mortgage for 170 but only 165 right? and in that case the loan would be 143k and deposit 27k so in total 170k again as before.

Read the below, slowly:

Before the valuation - NW would lend you £148k and you pay 22k to make up £170k

House valued at 165k

Vendor puts it back up to 170k

After the valuation - NW would lend you 148k and you pay 22k to make up £170k (although you need to check they are still happy to do so, don't see why though) 

I can't explain it any easier than that.

If you have extra money sloshing around I would pay as big a deposit as possible, though. 

MWT

la531983 said:

I don't think the OP was confused about LTV, for some reason he thinks he has to pay more of a deposit, and therefore a smaller mortgage, because the vendor has ignored the valuation and added 5k to it. 

Which isn't the case. 

The reason to look at the LTV, is that is where an undervaluation is most likely to trigger a problem, as if they were applying for a 90% LTV product and the lower valuation made the LTV 91% then they would have had to increase their deposit as the amount the lender would be willing to advance would now be less than they had requested.

Luckily they were right on the margin, and just squeezed in below the 90% LTV, even £1k lower on the valuation and the story could have been different.

la531983

MWT said:

la531983 said:

I don't think the OP was confused about LTV, for some reason he thinks he has to pay more of a deposit, and therefore a smaller mortgage, because the vendor has ignored the valuation and added 5k to it. 

Which isn't the case. 

The reason to look at the LTV, is that is where an undervaluation is most likely to trigger a problem, as if they were applying for a 90% LTV product and the lower valuation made the LTV 91% then they would have had to increase their deposit as the amount the lender would be willing to advance would now be less than they had requested.

Luckily they were right on the margin, and just squeezed in below the 90% LTV, even £1k lower on the valuation and the story could have been different.

I agree but the OP is confusing himself here over something much more basic than this, so let's not confuse him even more!