Auction property mortgage downvalued options

sinkquick

First time buyer here. I've just had my mortgage declined due to a downvalued valuation as the loan to value exceeds the product I originally selected.
I have already paid a £5,500 deposit on a £110,000 auction that has now been downvalued to £106,000. I'm just wonder what my options could be going forward as I have a completion date on the 1st of August.
Would I be right in thinking that I would need to find an additional £4,000 to cover the remaining costs?

Hoenir

You'll need to fund the difference between the mortgage offer and the remaining balance to be paid of £104,500. 

BarelySentientAI

You would need to find however much extra deposit would make the mortgage acceptable to the lender based on a £106k valuation.

amnblog

Was your intention to put down 5% (£5,500) and take a 95% loan to value mortgage?

If so, your deposit requirement will now be £9,300 total (£3,800 extra)

The Lender will go to 95% of the value or purchase price (whichever is lower).

95% of £106,000 = £100,700

Hence balance to make agreed price is £9,300.

sinkquick

amnblog said:

Was your intention to put down 5% (£5,500) and take a 95% loan to value mortgage?

If so, your deposit requirement will now be £9,300 total (£3,800 extra)

The Lender will go to 95% of the value or purchase price (whichever is lower).

95% of £106,000 = £100,700

Hence balance to make agreed price is £9,300.

Thank you for that. Yes, that's right. I have already paid my 5% deposit on the £110,000 to the seller via agent estate so would the remaining balance be £3,800?

Am I right in thinking that if I could find this £3,800 then I would need to go back to the mortgage lender and ask them to adjust to the £100,700?

Thanks again!

amnblog

That is correct