Concessionary Mortgage question

DaffyDuck316

BarelySentientAI said:

DaffyDuck316 said:

Thanks, that is some really good advice MWT.

Could anyone tell me, give a simple example of how a lenders valuation could affect what I can afford with a discount. I just can't get my head around it, what happens if the valuation is more or less than the asking price.

If the lender values it lower than you expect, then you might not be able to get a big enough mortgage and need to come up with more cash.

Example:

House price £150,000.

Agreed discount 10%, so purchase price £135,000.  You are getting 90% mortgage, 10% deposit (the discount)

Lender values the house at £135,000.  You can't borrow £135,000 against a £135,000 house, so the lender says they will only let you borrow £125,000.

You now need to find £10,000 cash to make it up to the agreed purchase of £135,000 or you can't buy.

Hi everyone, I'm still awaiting response from my house offer. 

I am quite concerned about the above quote
Now I know buyers are not very often allowed to use overdraft/credit card for a deposit, but does that still apply after a lender valuation? It would be a shame to get all the way through the process and fall at this hurdle. Especially when I could easily pick up overtime and pay off any credit card debt that may arise. 

amnblog

No overdrafts or credit cards for deposit - full stop.

Has your Broker done one of these cases before?

DaffyDuck316

I haven't discussed this far ahead with my broker, I guess I like posting on here as you can get a wide scope of replies. 

Well I get paid every 4 weeks and so I get 13 paychecks a year. If this plays out long enough (8 weeks), I'll have two paychecks and only one rental payment, so I would have £3000 to work with. It could be enough to negotiate through a down valuation.

But yeah, my offer for the house needs to be accepted first.