Hi Mana,

The first thing you have to ask before even considering the savings options is if the property is really worth what you have negotiated. If i were you i would instruct an independent valuer to have a look, it may be that the property hasn't infact been undervalued, but infact you agreed to pay too much for the property in the first place. From the amounts mentioned, it seems like this is a lot more than a couple of grand!

If you do decide to pay the shortfall direct to the builder, in a couple of years time if it's found the property was worth less than what you paid, you could have problems getting a new mortgage due to a potential negative equity situation.

What you should try to remember is that at the moment it is a buyer's market, and builders especially are taking a hit. I would ask for the full reduction or pull out.

Hope things turn out well for you.

Michael

Hi

This is my first post here and still coming to terms with the whole mortgage market and how they work.

We've negotiated a decent part-exchange deal with a builder and things were going smoothly until the lender severely undevalued the property we were hoping to buy from the builder.

Both my wife and I both earn a good wage so getting a mortgage isn't a problem. It's just that this under valuation by the lender means we'd be about £45k short, assuming the builder does not drop their price from what we had originally agreed on (still in negotiation with builder to see how much they can reduce).

My question is, if we use our savings to make up this deficit between what the lender will give for this property and what the builder wants, what are the medium and long term implications?

2 years later when house prices have dropped even further, does it effectively wipe out the £40k or so we'll have to put into this new house thereby not giving us much equity? What implications will this have when it comes to re-mortgaging or going on to a more expensive rate?

With regards to our personal situation, we aim to stay in this new house for at least 5 years.
We also need this or a similar sized house in the next few months because of twins on the way, hence the need to move even though it may not be the best move from a financial point of view.

Many thanks in advance,
Mana