WWYD re: house purchase

[ftb30]

Posted for traffic as I really need to make a decision today and my heart is ruling my head.

Property was advertised at £352k, offered £340k and this was accepted. Property is a 3 bed end of terrace in Essex and this seems a fair price looking at other properties on the market. It is ex-LA but has been privately owned for over 30 years and improved/extended. The next door property is privately owned but there are still some LA owned properties in the road.

Mortgage valuation has just come back at £315k. Reason for lower valuation was the mixed social housing and fact the property is ex-LA. Our mortgage provider not willing to re-evaluate and estate agent has told us that there are few mortgage providers that will lend on ex-council (I had mo idea about this!).

We can just afford the extra £25k but it will move our mortgage into the 90% LTV bracket and eat into funds we'd hoped to use for improvements. We also benefit from stamp duty freeze at the moment which I think will be withdrawn if we start again. We've paid for survey and incurred legal fees already.

We would stay in house at least 6/7 years. We are TTC and getting married (hopefully - postponed!) and the house is large enough to grow our family by two kids before we'd need to consider a move!

Seller will not lower price according to Estate Agent.

AIBU to ask WWYD?

1. Reduce offer to closer to £315k and pull out if seller won't accept
2. Reduce offer to closer to £315k but continue with higher LTV if seller won't accept
3. Continue with higher LTV
4. Just walk away now

TIA. 

If you add up the costs incurred to date, plus the stamp duty saving, then that gives you an idea about how much you’ll “loose” by pulling out. Offering £315k plus this amount is something I could justify to myself if I were in your shoes.

Tell vendors that the house is worth £315k per your survey. Anything they get in excess of that is upside for them, so I’d try and make some sort of offer above £315k. If they choose not to accept, that’s their prerogative.

1 not least because the country is going to shit. You’ll really kick yourself if there’s a crash.

Option 1 (and stick to it!))

@Ffsffsffsffsffs

Can't understand why you offered £15k over asking price in the first place, unless it was OIEO price, I've never heard of anyone doing that.

It's a big chunk extra to pay and you may not recoup it in equity quickly, plus higher LTV bracket.

You've had 2 surveys stating lower valuation (which is closer to where I'd have put an offer in tbh) so I'd go for option 1. Buyers market at the moment, they're going to benefit from stamp duty reduction too.

They didn’t offer over the asking price?

Option 1 then option 4 if if doesn’t work out.

Go with option 1. Many sellers are over pricing their house by what stamp duty ‘would have been’ or close to that amount thinking that buyers will be happy to pay it. Fortunately, the mortgage companies are having none of it. Yes, you may lose the house, but that’s better than over paying. You’d be starting out with negative equity if you over pay.

I'd be careful. My in laws moved to an ex-LA house on a street with mixed ownership just before the last recession. They were stuck there for years in negative equity and never made much money. Whereas we bought in a nicer road and made quite a bit.

Id listen to the mortgage providers. Unless this is an excellent deal (which you suggest it isn't) I would steer clear and find something else. Although obviously the stamp duty holiday is soon running out so you'll need to factor that in of course.

Sorry, how annoying for you.

Can you still get the mortgage at 90%, i know some lenders have pulled their 90 & 95% products at the moment

Reduce offer and explain why.

Decide what to do after you hear back from the vendor. You can still out in a higher offer later, depending on how you feel.

Dh and I were in a similar situation a few years ago and pulled out of buying. In hindsight it was absolutely the right thing to do as we'd planned to stay a good few years but redundancy meant relocating and we'd have been trapped.

If the valuation says 315k, why on earth would you stump up another 25k? Ask them to reduce the price, or walk away.

This happened to us when we bought from a developer. They were quite arsey with us over our part exchange figure, drilled us right down to the absolute lowest figure they would pay for our property and kept telling us “if that’s what the valuation says, why would we pay you more”

We made the same argument back to them when the bank gave us a valuation that was 25k short. They had no other option but to sell to us so they dropped the price. At no point did I think I had to try and find another 25k.

optIon 1, many houses have over inflated prices at the moment and when it comes to mortgage valuation are being down valued.

Why pay £25k over the value to save stamp duty?

It's a false economy.

+1 here for Option One. Do it in writing so the agent can't mess it up (insist your email itself gets passed on). Include paperwork from mortgage company, and any evidence that you can gather that it would be the same with other lenders, and make it clear this is a lender issue, not a buyer issue. As a goodwill gesture, add 5-10k onto the 315k and make it clear that this is personal funds, all the cash you have, and curtails your ability to make some changes you planned on (don't call them improvements). Say something nice to conclude about how you really like the house, you hope it works out, you understand the Vendor's need to get the best price but it seems like they might have the same issue with other buyers/lenders in an uncertain economy (never underestimate people's ability not to think of the obvious). And if this doesn't work, walk away because otherwise you'll likely end up underwater here for years. Good luck!

Reduce offer and explain why if you really want the house or walk away. No way effectively give away £25k.

Go back to the vendors and say not going over the mortgage value.

You say more will use up your improvements budget. So you risk end up in a not sorted house that you cannot sell on for the same value. It's high risk in the current economic climate. There will be more job losses.

Option 1

I wouldn't go over the valuation price either

Show them the paperwork explaining why you're reducing the offer.

you wouldn't give a stranger £25k for nothing so why now ?

Option 1

Why would you literally throw about £25k ... imagine the problem won't go away in 6 or 7 years when you yourself look to sell, so you might not get all (or even any!) of that extra £25k back, frankly.

@ftb30 315k is what the property is worth, show them the mortgage company valuation and stick to your guns. Also the 315k valuation has also been bolstered by the stamp duty holiday. The lender knows what the valuation is and is head over heart and objective. They will very likely experience the same with all future buyers compounded with the likely house price drop post stamp duty holiday.

The market will be a lot less ‘hot’ for sellers after the stamp duty holiday so play that back to them.Good luck 🙂

Definitely 1 ... I agree with PPs that, in the current climate, you certainly don't want to end up with a mortgage higher than the value of the house

This is a risk anyway if prices fall, so there's no point in paying over the odds to start with

Good advice from @agonyauntie2020 also

Another vote for option 1. Also, if the wedding is postponed, then I would suggest that TTC also is!

I am always shocked you how definite posters are with their advice on such scant information.

Your approach should be led by what you know re the venders

Probate - likely they won’t be in a rush to sell. So if you love love life the property - increase your offer

If they are in a chain - more bargaining power. Worth negotiating

If it was a buy to let - do same as probate

And so on

Your approach should be led by what you know re the venders

I meant to add

AND by how much you love the property and it fits your purposes