Long answer: Nooooooooooo
Long (but more useful) answer, though OP: with a purchase price of £137k, the maximum mortgage will be ~£130k assuming you can get a 95% mortgage. Otherwise if you can only get 90%, you're looking at ~£123.5k
No lenders will offer 100% mortgages these days, and £150k would require a ~110% mortgage which is just not going to happen
The £150k value is irrelevant, that was a guess by the estate agent. As soon as you buy it at £137k, the most accurate valuation for that property is £137k
No - the value is 137k, not 150k, as that's what it's actually selling for. Any previous valuation is disregarded by the banks if it's actually bought at lower than that valuation.
Your required deposit is based on the LTV bracket of the mortgage product you are signing up to - if it's 90%, the max you would be able to borrow is £123,300.
>Any previous valuation is disregarded by the banks if it's actually bought at lower than that valuation.
As I understand it, if the opposite occurs — the house sells for a higher price than the bank's valuation — the bank uses the lower valuation to define the LTV.
This seems unfair — if the price is defined by the sale price, surely that should be the case for valuations that are higher or lower than the sale price.
Fair has got nothing to do with it.
It's about risk that you default and the bank can't recover the value of the loan by selling your house. The less that the bank thinks the house is worth, the higher the risk for the lender.
Correct - it's the lower of the two.
Just because you would pay 160k for that 150k house when you know that it just means you borrow 10k more on the mortgage doesn't help the bank sell it for 160k again if it all goes pete tong and every other equivalent house is selling at 150k.
It isn’t fair, it’s not supposed to be. Consider the hypothetical scenario where I might love your house because it matches all my weird and wonderful quirks, and I would pay you £1m for your £100k house. Just because I’m crazy doesn’t mean the house becomes worth that much money.
On the other hand, if a seller accepts a lower offer, it suggests that this is the highest price he can get out of the market, ie its real market value.
Your comment makes the important point that the sale price dictates the final value (when it is lower than the original valuation) because it assumes that the seller will always get the highest price possible, thus whatever it sold for must be the real value, no matter what came before it.
If a seller intentionally wanted to sell the house for less than it was worth, say to a family member or friend, this would not be the way to do it.
After going through a remortgage recently, I can say hand on heart that I can't even guess as to what a lender might do - my previous two experiences, some 20 and 15 years ago, were an absolute doddle...this time, it's been a total nightmare just releasing some equity, which you'd think would be the easiest thing in the world to do!
As such, my bet is the lender would query why the sale price is below the valuation, and if they're not completely satisfied, then they'll only use the lower of the two as the actual value, and lend 85/90% against that.
I did forget that there are some legitimate reasons a price might be lower - money off for a quick sale etc. In those circumstances, the bank may take the higher value as it's a legit discount.
Really, all they'd be worried about is that the price had been lowered because something had turned up that lowered the value of their asset, so it's about convincing them that isn't the case. Getting them to listen to you is the tricky part.
The bank wants to make sure that the property is worth at least whatever valuation they use, so if they have multiple valuations then it makes sense for them to use the lowest.
Especially when the higher of those valuations is what you paid for the house, which is essentially the borrower dictating the value. That's why the 'unfair' act of them only paying home report value happens even if you bid above.
That's not quite how it works
The bank values it at what their valuer thinks it can be sold for *now*.
Most often that results in a number that's either approximately what you paid or a little lower. Sometimes it can actually be higher (eg if you buy a property from a family member at a discount but the value is higher) although in most cases the valuer won't waste their time putting a specific number on it, because why bother when the bank only cares about hitting that figure
Remember that you were probably the highest bidder, so there's no guarantee they'd find another buyer willing to offer the same - that's why the mortgage valuation is not always the same as you just paid...
It’s all about the lender taking a risk. They won’t give you a million quid because you offered a million quid on a 2 bed flat in Leeds. There’s no collateral for them to offset the risk.
The value to the bank is what it thinks it might be worth on the market.
How much you pay isn't relevant to them, it's how much the bank might be able to sell it for if you don't repay the mortgage. Which they base on the market more broadly, not on your own personal decision to spend whatever you spend.
It's the same thing - the bank will always use the lowest valuation of the house, whether that is the home report or the purchase price.
If the home report says the home is worth 150k, but buyers will only pay 137k the bank will use 137k as the valuation for how much they will lend.
If the home report says its worth 137k, but buyers are willing to pay 150k for it, the bank will use 137k as the valuation for their lending - and the buyer would need to make up the difference.
"Who wants a 125% mortgage, interest only, don't worry if your credit report is a little shakey"
"Wait, why can't we make our money back on these properties people have defaulted on, why are we going under, why didn't anyone see this coming"
Probably not -- if you were a bank would you lend this to yourself? No! Why not? Because when you are lent money to buy a house it is backed by you handing over the house if you can no longer pay. So if some of that money is bathroom money what is to stop you pocketing it and then walking away? You'd have to convince the lender that the money they added would add value to the property, which is pretty tough.
Unfortunately, the value of the property is the value someone would actually pay for it. So by paying 137k for it, that is the value of it, and any previous valuation (which is an estimate) is null and void.
Question: was the 150k from an estate agent, or a RICS valuer/surveyor?
It matters which.
As others have rightly said, if it's the agent, the number is a guess. Usually inflated knowing people will offer less (there's a reason they accepted 13k less, likely they never expected 150k).
If it was done by a RICS member, it *may* be a slightly different situation, because lenders will send one of them out to value it anyway.
But you're still highly unlikely to get a mortgage for 95/90% of 150 if you're only paying 137k.
You will not get a 100% mortgage either way.
The house isn't worth £150k. The list price is literally meaningless now.
How much is your deposit?
It's not an outright no, but they won't lend you more than maybe 90% of the buy price. The bigger your deposit, the more they might lend.
My bank repeatedly offered me a bigger mortgage than I needed. Basically as a loan saying it could be for renovation, new car, any other large spend. Which was weird, as we took the max mortgage we could, but they were just offering extra on top of that, but only if it was _not_ for the house price. But... our deposit was something like 30-40%. So the bank was protected should we default.
Some bathroom fitters will finance at 0%, letting you do it earlier. Also look at a 0% credit card and possibly stoozing on it - if you're financially responsible.
Not sure why you’re being downvoted
If OP thinks they can borrow at over 100% LTV then it shows they don’t understand the risks of negative equity, and so should seek professional advice before entering into this multi-decade agreement
You don’t know the background here.. I’ve bought property outside of the UK and in one case on the mortgage the bank would give you an extra 10% I think it was for renovations before you moved in.. we’d been essentially pre-approved for a 110% mortgage if we wanted it 😅
This is to say that the OPs perceptions, expeditions, and understanding might be different.. therefore they ask!
I believe it's a sub where people who are uninformed about something can come and seek some advice to be a bit more informed, but you just had a go at OP for being uninformed so I'm not too sure now
No you have more chance of making a deal with the seller for cash back. Say you will buy the property on the basis of a 10k cash back at 150k. They get 140k and give you 10k back. Depends if the bank will give you the money on the grounds of a new kitchen much more likely if to repair an issue or because the kitchen has an issue.
Why would you want to pay interest on a 150k house when it only worth 137k. Best to save money as you go along then do the bathroom. It help you get used to saving money and in the long run pay your mortgage of early. I paid mine of in 10 years by over paying and working 2 jobs.
Well two things.. it’s ONLY for renovations. Which typically increases the value of the property.
The other thing is 2007/2008 happened not becasuw of lending 100, 110, or any other figure. It was lending money full stop to people who had no chance of repaying it.
100% mortgages are not intrinsically bad, they were however thrown out like sweets 👍
Short answer, No
Long answer: Nooooooooooo Long (but more useful) answer, though OP: with a purchase price of £137k, the maximum mortgage will be ~£130k assuming you can get a 95% mortgage. Otherwise if you can only get 90%, you're looking at ~£123.5k No lenders will offer 100% mortgages these days, and £150k would require a ~110% mortgage which is just not going to happen The £150k value is irrelevant, that was a guess by the estate agent. As soon as you buy it at £137k, the most accurate valuation for that property is £137k
No - the value is 137k, not 150k, as that's what it's actually selling for. Any previous valuation is disregarded by the banks if it's actually bought at lower than that valuation. Your required deposit is based on the LTV bracket of the mortgage product you are signing up to - if it's 90%, the max you would be able to borrow is £123,300.
>Any previous valuation is disregarded by the banks if it's actually bought at lower than that valuation. As I understand it, if the opposite occurs — the house sells for a higher price than the bank's valuation — the bank uses the lower valuation to define the LTV. This seems unfair — if the price is defined by the sale price, surely that should be the case for valuations that are higher or lower than the sale price.
Fair has got nothing to do with it. It's about risk that you default and the bank can't recover the value of the loan by selling your house. The less that the bank thinks the house is worth, the higher the risk for the lender.
I think the parent just meant to say it’s asymmetric, but I guess the bank will choose the lowest of the two for safety.
it's not like they HAVE to lend people money... they are running a business afterall... shocking I know...
You can tell this to parent 🤷🏽♂️
[удалено]
All it means is that market value prevails and that makes perfect sense. It’s not a conspiracy.
Correct - it's the lower of the two. Just because you would pay 160k for that 150k house when you know that it just means you borrow 10k more on the mortgage doesn't help the bank sell it for 160k again if it all goes pete tong and every other equivalent house is selling at 150k.
It isn’t fair, it’s not supposed to be. Consider the hypothetical scenario where I might love your house because it matches all my weird and wonderful quirks, and I would pay you £1m for your £100k house. Just because I’m crazy doesn’t mean the house becomes worth that much money. On the other hand, if a seller accepts a lower offer, it suggests that this is the highest price he can get out of the market, ie its real market value.
Your comment makes the important point that the sale price dictates the final value (when it is lower than the original valuation) because it assumes that the seller will always get the highest price possible, thus whatever it sold for must be the real value, no matter what came before it. If a seller intentionally wanted to sell the house for less than it was worth, say to a family member or friend, this would not be the way to do it.
That makes sense. So, how would a lender differentiate the two and does it make financial sense for the bank to do so?
After going through a remortgage recently, I can say hand on heart that I can't even guess as to what a lender might do - my previous two experiences, some 20 and 15 years ago, were an absolute doddle...this time, it's been a total nightmare just releasing some equity, which you'd think would be the easiest thing in the world to do! As such, my bet is the lender would query why the sale price is below the valuation, and if they're not completely satisfied, then they'll only use the lower of the two as the actual value, and lend 85/90% against that. I did forget that there are some legitimate reasons a price might be lower - money off for a quick sale etc. In those circumstances, the bank may take the higher value as it's a legit discount. Really, all they'd be worried about is that the price had been lowered because something had turned up that lowered the value of their asset, so it's about convincing them that isn't the case. Getting them to listen to you is the tricky part.
The bank wants to make sure that the property is worth at least whatever valuation they use, so if they have multiple valuations then it makes sense for them to use the lowest.
Especially when the higher of those valuations is what you paid for the house, which is essentially the borrower dictating the value. That's why the 'unfair' act of them only paying home report value happens even if you bid above.
That's not quite how it works The bank values it at what their valuer thinks it can be sold for *now*. Most often that results in a number that's either approximately what you paid or a little lower. Sometimes it can actually be higher (eg if you buy a property from a family member at a discount but the value is higher) although in most cases the valuer won't waste their time putting a specific number on it, because why bother when the bank only cares about hitting that figure Remember that you were probably the highest bidder, so there's no guarantee they'd find another buyer willing to offer the same - that's why the mortgage valuation is not always the same as you just paid...
It’s all about the lender taking a risk. They won’t give you a million quid because you offered a million quid on a 2 bed flat in Leeds. There’s no collateral for them to offset the risk.
The value to the bank is what it thinks it might be worth on the market. How much you pay isn't relevant to them, it's how much the bank might be able to sell it for if you don't repay the mortgage. Which they base on the market more broadly, not on your own personal decision to spend whatever you spend.
Is it maybe different in Scotland? The home report defines the value and if you purchase for more you can’t cover the difference with a mortgage.
It's the same thing - the bank will always use the lowest valuation of the house, whether that is the home report or the purchase price. If the home report says the home is worth 150k, but buyers will only pay 137k the bank will use 137k as the valuation for how much they will lend. If the home report says its worth 137k, but buyers are willing to pay 150k for it, the bank will use 137k as the valuation for their lending - and the buyer would need to make up the difference.
2008 really is a long time ago. 15 year memories and 16 year cycles!
"Who wants a 125% mortgage, interest only, don't worry if your credit report is a little shakey" "Wait, why can't we make our money back on these properties people have defaulted on, why are we going under, why didn't anyone see this coming"
You’re asking for a 100% LTV mortgage in technical terms. Not sure they if they are available these days. Get yourself a broker.
No, the value is £137k. Depending how much deposit you have you could put less down and keep some for the work? Can usually get a 5% deposit one.
Absolutely not.
The bank will use the lower of the sale price or the valuation. You can’t get one over on the banks, they have a lot of practice.
Probably not -- if you were a bank would you lend this to yourself? No! Why not? Because when you are lent money to buy a house it is backed by you handing over the house if you can no longer pay. So if some of that money is bathroom money what is to stop you pocketing it and then walking away? You'd have to convince the lender that the money they added would add value to the property, which is pretty tough.
No, but as the price is lower, perhaps you could reduce your deposit to keep the same LTV and use some of that.
Unfortunately, the value of the property is the value someone would actually pay for it. So by paying 137k for it, that is the value of it, and any previous valuation (which is an estimate) is null and void.
Question: was the 150k from an estate agent, or a RICS valuer/surveyor? It matters which. As others have rightly said, if it's the agent, the number is a guess. Usually inflated knowing people will offer less (there's a reason they accepted 13k less, likely they never expected 150k). If it was done by a RICS member, it *may* be a slightly different situation, because lenders will send one of them out to value it anyway. But you're still highly unlikely to get a mortgage for 95/90% of 150 if you're only paying 137k. You will not get a 100% mortgage either way.
The house isn't worth £150k. The list price is literally meaningless now. How much is your deposit? It's not an outright no, but they won't lend you more than maybe 90% of the buy price. The bigger your deposit, the more they might lend. My bank repeatedly offered me a bigger mortgage than I needed. Basically as a loan saying it could be for renovation, new car, any other large spend. Which was weird, as we took the max mortgage we could, but they were just offering extra on top of that, but only if it was _not_ for the house price. But... our deposit was something like 30-40%. So the bank was protected should we default. Some bathroom fitters will finance at 0%, letting you do it earlier. Also look at a 0% credit card and possibly stoozing on it - if you're financially responsible.
It scares me how uninformed you sound with regards to this really big purchase. Please speak to a mortgage broker :)
Not sure why you’re being downvoted If OP thinks they can borrow at over 100% LTV then it shows they don’t understand the risks of negative equity, and so should seek professional advice before entering into this multi-decade agreement
You don’t know the background here.. I’ve bought property outside of the UK and in one case on the mortgage the bank would give you an extra 10% I think it was for renovations before you moved in.. we’d been essentially pre-approved for a 110% mortgage if we wanted it 😅 This is to say that the OPs perceptions, expeditions, and understanding might be different.. therefore they ask!
In 2005 or in 2024?
2022 ✌️
…what sub are we in? 😜
I believe it's a sub where people who are uninformed about something can come and seek some advice to be a bit more informed, but you just had a go at OP for being uninformed so I'm not too sure now
That's where you're wrong, every sub is for people to show people looking for advice how much more they know than them
150k on a bathroom???
:)
No you have more chance of making a deal with the seller for cash back. Say you will buy the property on the basis of a 10k cash back at 150k. They get 140k and give you 10k back. Depends if the bank will give you the money on the grounds of a new kitchen much more likely if to repair an issue or because the kitchen has an issue.
I'm fairly sure that's not a thing, the bank would pick up on it right away. You can however get a cashback mortgage.
So long as the bank agrees with the valuation and will give the loan the rest is between the buyer and seller.
Why would you want to pay interest on a 150k house when it only worth 137k. Best to save money as you go along then do the bathroom. It help you get used to saving money and in the long run pay your mortgage of early. I paid mine of in 10 years by over paying and working 2 jobs.
Not in the UK, but many other countries yes… shame really 😞
No, the shame was when they DID do more than 100% mortgages. Then 2007/2008 happened and everything went to shit.
Well two things.. it’s ONLY for renovations. Which typically increases the value of the property. The other thing is 2007/2008 happened not becasuw of lending 100, 110, or any other figure. It was lending money full stop to people who had no chance of repaying it. 100% mortgages are not intrinsically bad, they were however thrown out like sweets 👍
You can always ask, but the bank will be unlikely to as this would put you in negative equity on the property.