Mortgages - First Time Buyers - Down Valuations

Aims1987

Hi All, just wanted to share my experience of applying for mortgages as a first time buyer. 

At first I applied through NatWest as they had rates of 3.9%, but I really dislike this bank and last minute decided to go with Nationwide who I do all of my banking with, they have a rate of 4.1%.

Thank god I did as Natwest down valued my property by £20,000! 

Nationwide offered the full loan.

I’m putting 30% deposit in so have a lower loan to value. 

It really feels like NatWest lure you in with low rates only to down value which would make you use more of deposit, meaning a higher LTV and higher rates.

I thought I’d share my experience so if you get down valued don’t worry don’t just accept it, just try a different lender instead. 

ReadySteadyPop

Decent rates, I think mortgage rates will be on the up quite soon.

https://www.msn.com/en-us/money/realestate/halifax-and-barclays-increase-mortgage-rates-amid-budget-jitters/ar-AA1sqRts?ocid=BingNewsSerp

user1977

"£20,000" doesn't tell us much about the margin of any downvaluation (or over-valuation) - what is the price?

Aims1987

user1977 said:

"£20,000" doesn't tell us much about the margin of any downvaluation (or over-valuation) - what is the price?

Hey, our offer is £355K in Essex. 

BikingBud

Aims1987 said:

Hi All, just wanted to share my experience of applying for mortgages as a first time buyer. 

At first I applied through NatWest as they had rates of 3.9%, but I really dislike this bank and last minute decided to go with Nationwide who I do all of my banking with, they have a rate of 4.1%.

Thank god I did as Natwest down valued my property by £20,000! 

Nationwide offered the full loan.

I’m putting 30% deposit in so have a lower loan to value. 

It really feels like NatWest lure you in with low rates only to down value which would make you use more of deposit, meaning a higher LTV and higher rates.

I thought I’d share my experience so if you get down valued don’t worry don’t just accept it, just try a different lender instead. 

As a first time buyer why do you think you have any more ability to correctly determine the price of a property?

Bear in mind the other parties are purely interested in charging the most they can for the property. 

Perhaps if the lenders suggest the property is worthless then consider if you really want or need to pay the extra £20k.

[Deleted User]

BikingBud said:

Aims1987 said:

Hi All, just wanted to share my experience of applying for mortgages as a first time buyer. 

At first I applied through NatWest as they had rates of 3.9%, but I really dislike this bank and last minute decided to go with Nationwide who I do all of my banking with, they have a rate of 4.1%.

Thank god I did as Natwest down valued my property by £20,000! 

Nationwide offered the full loan.

I’m putting 30% deposit in so have a lower loan to value. 

It really feels like NatWest lure you in with low rates only to down value which would make you use more of deposit, meaning a higher LTV and higher rates.

I thought I’d share my experience so if you get down valued don’t worry don’t just accept it, just try a different lender instead. 

As a first time buyer why do you think you have any more ability to correctly determine the price of a property?

Bear in mind the other parties are purely interested in charging the most they can for the property. 

Perhaps if the lenders suggest the property is worthless then consider if you really want or need to pay the extra £20k.

Nationwide offered the full loan, so that's equally relevant evidence that it's worth "the extra".

In my family the difference in bank valuation on a property was 10%. I believe that a margin of error is recognised in the process of "professional" valuation.

The final point made by OP is a good one. Try another lender.  I have noticed a lot of people on this forum treat lender "down valuations" as an opportunity to get a reduction. But, I wouldn't be reducing my price, as bank valuations that "down value" by as much as 10% do not infallibly " correctly determine the price of a property".

BikingBud

Nationwide are also interested in the price being as high as possible, after all they can lend more and gather more interest.

Aims1987

[Deleted User] said:

BikingBud said:

Aims1987 said:

Hi All, just wanted to share my experience of applying for mortgages as a first time buyer. 

At first I applied through NatWest as they had rates of 3.9%, but I really dislike this bank and last minute decided to go with Nationwide who I do all of my banking with, they have a rate of 4.1%.

Thank god I did as Natwest down valued my property by £20,000! 

Nationwide offered the full loan.

I’m putting 30% deposit in so have a lower loan to value. 

It really feels like NatWest lure you in with low rates only to down value which would make you use more of deposit, meaning a higher LTV and higher rates.

I thought I’d share my experience so if you get down valued don’t worry don’t just accept it, just try a different lender instead. 

As a first time buyer why do you think you have any more ability to correctly determine the price of a property?

Bear in mind the other parties are purely interested in charging the most they can for the property. 

Perhaps if the lenders suggest the property is worthless then consider if you really want or need to pay the extra £20k.

Nationwide offered the full loan, so that's equally relevant evidence that it's worth "the extra".

In my family the difference in bank valuation on a property was 10%. I believe that a margin of error is recognised in the process of "professional" valuation.

The final point made by OP is a good one. Try another lender.  I have noticed a lot of people on this forum treat lender "down valuations" as an opportunity to get a reduction. But, I wouldn't be reducing my price, as bank valuations that "down value" by as much as 10% do not infallibly " correctly determine the price of a property".

Thanks, you seem to understand our position. 

Most lenders do a desk top valuation now, they don’t even look at any pictures of the property let alone visit it. They base the valuation off an algorithm in a computer.

We know how much houses go for in the area and the amount our sellers have spent refurbishing it to the highest standard, so it’s worth the price to us.

I would only renegotiate the price if all lenders came back with a devaluation.

We are also putting a 30% deposit in.

user1977

Aims1987 said:

user1977 said:

"£20,000" doesn't tell us much about the margin of any downvaluation (or over-valuation) - what is the price?

Hey, our offer is £355K in Essex. 

So split the difference and it's £345k +/- 2.9%, which is well within normal valuation margin of error (which is at least 5% depending on the type of property).

ReadySteadyPop

BikingBud said:

Nationwide are also interested in the price being as high as possible, after all they can lend more and gather more interest.

Yes, that is the root of the problem really.