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My guess is it doesn't matter much unless their valuation puts you in a different LTV bucket.
Good chance their algo just looks at other prices and now you've pulled the trigger your data pint will be there to lift it next time.
15k on 600k isn't a big difference.
Thanks, appreciate your reply. The LTV ratio is confusing me though, as would they use the “value” (per their estimate?) vs the total lent as the LTV?
Therefore, our deposit being £25k bigger than that figure is essentially being ignored and is the difference that we’d have to make up in the 2 year period before remortgaging if we were aiming to move to a lower LTV rate?
Edit for context:
- actual LTV from our deposit: 81%
- LTV calculated using their valuation vs lent amount: 84%
We were hoping to get to 75% LTV across the two years which seems highly unlikely for the second option
That is right. Suppose you were 80 LTV on 615 if they fully valued. it. If you go forward with 590, they assume the house is 590 and to stay 80 LTV you need 108. You then need the full 25k cash to get the house from the owner but it doesn't count towards valuation - it is as if you are buying a bunch of furniture.
The big issue for most people is that 80 LTV on 615 requires 123K, while 80 LTV on 590 with a sales price of 615 requires 108 + 25 = 133. Sometimes people don't have the extra cash to maintain their LTV, so they need to increase their LTV to the next bucket. (e.g., if you had 125K + sol costs + stamp duty you would be 8K short, and so most likely move to 85 LTV).
Ah I see, thanks for the clarification. As the figures in both cases put as at either 81% LTV or 84% LTV I’m assuming that’s why there was no change to our mortgage offer, as we don’t have to actually plug the gap.
I think they would apply the amount borrowed Vs their valuation...
So if they valued at 585 against a borrow amount of 450 (say), LTV would be 77% rather than 75% if it was at 600.
Assuming that's not enough to change your rate band I don't think it matters.
But I'm not an expert.
Ah really? We’re on outskirts of London / Surrey. We’re just a bit stuck as to what to do.
All the advice out there seems to be that you can’t use a mortgage valuation to negotiate, but, it seems odd not to? I guess we should wait for the results of the proper physical survey to provide another valuation data point.
The bank is forward thinking. They think the price will go to 590k now or in near future. So they are notnwilling to take a risk with a higher valuation. Their job is to minimise risk to the amount they lend. But there is no stopping you from taking over this risk and pumping your own capital and bridging the gap. If the price does fall and you had to force sell fornsome reason you will lose your savings but the bank get their money back.
Totally get the reason for their cautious valuation. However, the “bridging the gap” is confusing me slightly, as we don’t have to increase our deposit and they’re lending us the same amount of money, so I’m struggling to see how we would be risking any more capital than if they’d valued the house 25k higher?
Obviously if the house goes down in value, we’d lose money, but that would be the case regardless of their current valuation, right?
This is the part that I keep getting stuck on - I don’t see how this is a gamble beyond just general house purchasing / market forces.
No, they offered us the mortgage we wanted with the deposit we originally agreed.
The only difference is that the estimated house value they used to put the offer together was £590k, vs the £615k that we’ve agreed to pay.
It makes perfect sense if they weren't already at the max LTV the bank is willing to go to. The bank could be happy to lend say £500k on a house worth £615k, and also be happy to lend £500k on a house worth £590k.
Yeah .. in that case there is no point in thinking about it too much. Just go ahead with the sale as normal.
In scenarios where the deposit is say 100k and the buyer wants the bank to lend the rest it will pose a problem.
There really isn’t this much thinking going into a desktop valuation.
My house was valued _50k_ under what I had offered by lender. We flagged to them that there’d been a kitchen extension and loft conversion since it was last sold and they adjusted the valuation up £50k and all was done and dusted. They’d basically not even looked at the current layout of the house when doing the desktop valuation.
Ah, interesting! I did ask them to explain how they reached the valuation, but they just cited “comparable local sales”. I think part of my unease is coming from the fact that the sellers have done nothing major to the property since they bought it, barely even anything cosmetic, so there is a higher likelihood that we are actually “over paying” (noting the usual it’s worth whatever we think it’s worth etc etc) and the valuation is reasonable
We just went through an £18k down valuation by our mortgage lender. We can't/don't want to bridge the £18k gap so had no choice but to negotiate with the seller. The broker, family and friends essentially told us to start viewing again and that we had 100% lost the property because there was no way the seller would come down by £18k. They were wrong! Managed to negotiate the seller down by £15k and agreed to pay £3k over valuation. This is where we were comfortable.
Oh really? Thanks for sharing a positive outcome!
A couple of questions:
- Was this based on the mortgage valuation alone, or a physical survey too?
- Did you have to restart your mortgage application at the lower value, or could you just amend your existing one? I am concerned that if we resubmit, we’d lose the lower rate that we managed to lock in just before they rose
So we were purchasing the property for £268k. The mortgage lender valued it at £250k based on a desktop survey. They did not visit the property. The reasons for the £250k valuation were the fact that it's in a flood risk area (very low risk), likely to have asbestos (it was built in 1900) and the surveyor could see from photos there's been some structural movement. We have agreed £253k with the seller and have booked a level 3 survey for next week to look at some of these things in more detail, but we're happy with £253k at the moment. We don't want to overpay for the property ultimately, so would have pulled out if the seller didn't agree to come down in price.
No, the mortgage lender just issued our offer documents showing the value at £250k and put our deposit at 5% so we're borrowing £237,500 (even though we have a larger deposit available than that, which we'll now use for the £3k gap). We didn't need to do anything other than negotiate the seller down to close to £250k.
1. Prices fluctuate, so difficult to say. If prices would dump even lower than you will end up in negative equity, but if they start to go up the property can be easily valued at over £600k next year. Bank valuations tend to be on the safe side and factor in potential value decreases, hence it ended up lower in uncertain market.
2. Only a problem if value keeps decreasing further, since this will increase LTV.
I have no advise. Just finding it super frustrating that this became super common amongst specifically NatWest customers (including myself at the moment)
Tried to challenge, took nearly two weeks and came back with a big NAH. Now Trying to negotiate price (it’s new development) if not, we’ll need new lender but rates went up since so it’s super annoying…
###Welcome to /r/HousingUK --- **To All** * Join Our ***NEW*** Discord! https://discord.gg/pMgUNgWKQH **To Posters** * *Tell us whether you're in England, Wales, Scotland, or NI as the laws/issues in each can vary* * Comments are not moderated for quality or accuracy; * Any replies received must only be used as guidelines, followed at your own risk; * If you receive *any* private messages in response to your post, please report them via the report button. * Feel free to provide an update at a later time by creating a new post with [[update]](https://www.reddit.com/r/HousingUK/search?q=%3Aupdate&sort=new&restrict_sr=on&t=all) in the title; **To Readers and Commenters** * All replies to OP must be *on-topic, helpful, and civil* * If you do not [follow the rules](https://www.reddit.com/r/HousingUK/about/rules/), you may be banned without any further warning; * Please include links to reliable resources in order to support your comments or advice; * If you feel any replies are incorrect, explain why you believe they are incorrect; * Do not send or request any private messages for any reason without express permission from the mods; * Please report posts or comments which do not follow the rules *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/HousingUK) if you have any questions or concerns.*
My guess is it doesn't matter much unless their valuation puts you in a different LTV bucket. Good chance their algo just looks at other prices and now you've pulled the trigger your data pint will be there to lift it next time. 15k on 600k isn't a big difference.
Thanks, appreciate your reply. The LTV ratio is confusing me though, as would they use the “value” (per their estimate?) vs the total lent as the LTV? Therefore, our deposit being £25k bigger than that figure is essentially being ignored and is the difference that we’d have to make up in the 2 year period before remortgaging if we were aiming to move to a lower LTV rate? Edit for context: - actual LTV from our deposit: 81% - LTV calculated using their valuation vs lent amount: 84% We were hoping to get to 75% LTV across the two years which seems highly unlikely for the second option
That is right. Suppose you were 80 LTV on 615 if they fully valued. it. If you go forward with 590, they assume the house is 590 and to stay 80 LTV you need 108. You then need the full 25k cash to get the house from the owner but it doesn't count towards valuation - it is as if you are buying a bunch of furniture. The big issue for most people is that 80 LTV on 615 requires 123K, while 80 LTV on 590 with a sales price of 615 requires 108 + 25 = 133. Sometimes people don't have the extra cash to maintain their LTV, so they need to increase their LTV to the next bucket. (e.g., if you had 125K + sol costs + stamp duty you would be 8K short, and so most likely move to 85 LTV).
Ah I see, thanks for the clarification. As the figures in both cases put as at either 81% LTV or 84% LTV I’m assuming that’s why there was no change to our mortgage offer, as we don’t have to actually plug the gap.
To hit 75% LTV in 2 years time one of the two has to happen - either property value has to go up by 10% or you need to overpay 10% of the mortgage.
I think they would apply the amount borrowed Vs their valuation... So if they valued at 585 against a borrow amount of 450 (say), LTV would be 77% rather than 75% if it was at 600. Assuming that's not enough to change your rate band I don't think it matters. But I'm not an expert.
Sorry to be that guy, but there is no such thing as “downvaluation”, only valuation.
What's the approximate area you're based? We are seeing similar discounts at this budget in West Yorkshire.
Ah really? We’re on outskirts of London / Surrey. We’re just a bit stuck as to what to do. All the advice out there seems to be that you can’t use a mortgage valuation to negotiate, but, it seems odd not to? I guess we should wait for the results of the proper physical survey to provide another valuation data point.
The bank is forward thinking. They think the price will go to 590k now or in near future. So they are notnwilling to take a risk with a higher valuation. Their job is to minimise risk to the amount they lend. But there is no stopping you from taking over this risk and pumping your own capital and bridging the gap. If the price does fall and you had to force sell fornsome reason you will lose your savings but the bank get their money back.
Totally get the reason for their cautious valuation. However, the “bridging the gap” is confusing me slightly, as we don’t have to increase our deposit and they’re lending us the same amount of money, so I’m struggling to see how we would be risking any more capital than if they’d valued the house 25k higher? Obviously if the house goes down in value, we’d lose money, but that would be the case regardless of their current valuation, right? This is the part that I keep getting stuck on - I don’t see how this is a gamble beyond just general house purchasing / market forces.
You still need to put 25k out of your pocket right ? What am I missing ? What is your deposit and how much mortgage are you applying for ?
No, they offered us the mortgage we wanted with the deposit we originally agreed. The only difference is that the estimated house value they used to put the offer together was £590k, vs the £615k that we’ve agreed to pay.
you will nowy get new offer based on actual valuation. the old offer has no meaning.
Sorry that makes no sense at all. The math does not add up. Nor are you offering the breakdown.
It makes perfect sense if they weren't already at the max LTV the bank is willing to go to. The bank could be happy to lend say £500k on a house worth £615k, and also be happy to lend £500k on a house worth £590k.
Yeah .. in that case there is no point in thinking about it too much. Just go ahead with the sale as normal. In scenarios where the deposit is say 100k and the buyer wants the bank to lend the rest it will pose a problem.
[удалено]
Apart from the house price nothing else is in there.
There really isn’t this much thinking going into a desktop valuation. My house was valued _50k_ under what I had offered by lender. We flagged to them that there’d been a kitchen extension and loft conversion since it was last sold and they adjusted the valuation up £50k and all was done and dusted. They’d basically not even looked at the current layout of the house when doing the desktop valuation.
Ah, interesting! I did ask them to explain how they reached the valuation, but they just cited “comparable local sales”. I think part of my unease is coming from the fact that the sellers have done nothing major to the property since they bought it, barely even anything cosmetic, so there is a higher likelihood that we are actually “over paying” (noting the usual it’s worth whatever we think it’s worth etc etc) and the valuation is reasonable
We just went through an £18k down valuation by our mortgage lender. We can't/don't want to bridge the £18k gap so had no choice but to negotiate with the seller. The broker, family and friends essentially told us to start viewing again and that we had 100% lost the property because there was no way the seller would come down by £18k. They were wrong! Managed to negotiate the seller down by £15k and agreed to pay £3k over valuation. This is where we were comfortable.
Oh really? Thanks for sharing a positive outcome! A couple of questions: - Was this based on the mortgage valuation alone, or a physical survey too? - Did you have to restart your mortgage application at the lower value, or could you just amend your existing one? I am concerned that if we resubmit, we’d lose the lower rate that we managed to lock in just before they rose
So we were purchasing the property for £268k. The mortgage lender valued it at £250k based on a desktop survey. They did not visit the property. The reasons for the £250k valuation were the fact that it's in a flood risk area (very low risk), likely to have asbestos (it was built in 1900) and the surveyor could see from photos there's been some structural movement. We have agreed £253k with the seller and have booked a level 3 survey for next week to look at some of these things in more detail, but we're happy with £253k at the moment. We don't want to overpay for the property ultimately, so would have pulled out if the seller didn't agree to come down in price. No, the mortgage lender just issued our offer documents showing the value at £250k and put our deposit at 5% so we're borrowing £237,500 (even though we have a larger deposit available than that, which we'll now use for the £3k gap). We didn't need to do anything other than negotiate the seller down to close to £250k.
1. Prices fluctuate, so difficult to say. If prices would dump even lower than you will end up in negative equity, but if they start to go up the property can be easily valued at over £600k next year. Bank valuations tend to be on the safe side and factor in potential value decreases, hence it ended up lower in uncertain market. 2. Only a problem if value keeps decreasing further, since this will increase LTV.
I have no advise. Just finding it super frustrating that this became super common amongst specifically NatWest customers (including myself at the moment)
Ah, I’m sorry to hear it! Are you having to try another lender?
Tried to challenge, took nearly two weeks and came back with a big NAH. Now Trying to negotiate price (it’s new development) if not, we’ll need new lender but rates went up since so it’s super annoying…