I wonder if anyone can help us understand our present mortgage situation? 

My boyfriend and I recently applied for a mortgage for a flat we're buying on a shared ownership scheme.  We received an agreement in principle however the valuation carried out by the mortgage company's surveyor valued the property at £9,000 less than the asking price for our share of the property.  We are in the process of approaching the Housing Association with these findings, however I've been told that should the Housing Association maintain their asking price, we will not get an offer from our mortgage company.  Is this correct?  The amount of mortgage we have applied for is actually less than the mortgage company's value.  Accordingly, should we default on the mortgage, a sale of the property should cover the amount we have applied for.  So why would they not offer the amount we are applying for?  Is there something I'm missing here?

Many thanks

There are many different considerations the lender look at when deciding how much they will lend you. One being what is called loan to value. e.g. value £100k loan £95k = 95% loan to value

Most mortgages have a max. LTV and it is depending on your rate, eg lower rate for lower LTV

If the property is worth £100k and you are buying half for £50k, and you wish to borrow £50k then your LTV is effectively 100% from the lenders perspective, if the prop is down valued by £5000 but you are still paying the asking price the lenders will only lend you 100% of £47500

i hope this helps.

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Tenacious T

I am a financial adviser but am here only to point peeps in the right directions, most of the time this will be to speak to an IFA, we are not monsters and charges are agreeable upfront so dont be afraid, pick up the phone

Hi,

I know that this is a very old post and you have probably moved number of times since....?
Can you please let me know how did it resolved as I am in the similar situation when lender down-valued property by 30K (from the full value of the property available to buy though the shared-ownership scheme. As a result lender is offering less than expected/ required by HAs.
Did you managed to renegotiate the price or did the lender agreed to give you higher amount?
Did you need to carry out another valuation to get more idea about the actual value of the property?

Thanks

I am also in a similar boat can you let me know the outcome of your case. in my case the valuation has been downgraded by 20K. can I cover the difference myself and because the HA has told me already that they will not change the asking price?

this just happened with me. i got the ha to down value from 280,000 to 250,000. at the moment they are desperate to sell so they do usually comprimise. they may ask to go to another lender. in my case barclays were the only lender so once i sent them the survey report it took them 5 days to amend

the thing is, where its shared ownership they are watched closely by the government so they must understand buying a property worth less than what you pay is not affordable home ownership

stick by your guns and dont be afraid to tell them you would prefer to loose your holding deposit than have neg equity, they will realise that no one in thier right mind will buy below what its worth so they wont want to loose a buyer thats already there, if they are repitable they should be fine within a 10% drop